Monday, January 05, 2009

Can Wireless Broadband Displace DSL and Cable?

What's allowed broadband to displace dial-up Internet access has been wireline technologies. For consumers, they are DSL and Cable broadband. For businesses, add T1 lines. But now there's a new contender that might just do to wireline broadband what wireline broadband did to dial-up. That contender is wireless.

Sure, WISPs or Wireless Internet Service Providers have been around for years without mounting too much of a threat to either the telephone or cable companies. That's because they tend to be scattered few and far between, with very small service footprints. Business wireless Internet access is mostly centered in the dense downtown areas of major cities. Consumer wireless has mostly targeted rural subdivisions where housing is dense enough to offer serious revenue potential but beyond where DSL and cable service exists.

One wireless service that has been somewhat prolific has been two-way satellite Internet service. You find dishes atop many gas stations, restaurants, car dealerships, and chain stores. These are there to support Point of Sale operations and communications back to the head office. Consumers also use two-way satellite Internet, but have been slower to adopt it than satellite television.

The newer competition that actually may have the muscle to carve out a significant chunk of the broadband market is based on cellular technologies. All of the major cell phone carriers also offer data service. But it's only within the last year or two that broadband speeds have been available to a majority of the service area. Right now there are two competing systems. They are EDGE offered by AT&T and EV-DO offered by Verizon, Alltel and Sprint. Both offer similar speeds of approximately 700 Kbps. That's similar to many DSL services and not that much below the actual speed you get with Cable during periods of heavy usage.

Cellular broadband is popular for road warriors and business users who tend to be out of the office and around town with their laptop and notebook computers. It costs about double what the consumer broadband services do and runs on cellular frequencies which have limited ability to penetrate buildings. The advent of smartphones such as the Apple iPhone and BlackBerry Storm is making cellular broadband more of a must-have option. The other new trend is toward netbooks, much smaller and lighter notebook computers that may have cellular broadband connectivity built-in.

WiFi is the true wireless service for the masses. It is now built-into nearly every laptop and notebook PC and some cell phones and even gaming consoles. Free WiFi is available in most hotels and many restaurants. It's also the home networking solution of choice. But WiFi still needs a wireline service to feed it and has a service radius of only a few hundred feet.

WiFi on steroids is how WiMAX is sometimes described, although it is a completely different technology and requires its own aircard. WiMAX has a service radius measured in kilometers and speeds measured in Mbps. In the 700 MHz band, it can easily penetrate buildings and provide home or office broadband service without the need for an outside antenna.

The competitor to WiMAX will soon be LTE, a cellular broadband standard that also offers cable Internet speeds of a few Mbps or more. It is also expected to be built-out using the 700 MHz frequencies auctioned off from the shutdown of analog television.

WiMAX and LTE will likely displace EV-DO and EDGE somewhere down the road. Both are just starting deployment, with only a few cities expected to be up and running this year. But will they obsolete DSL and cable broadband? Not for a long time. These technologies are well entrenched with sunk costs and the ability to offer lower pricing and higher speeds as competition develops. Wireless will probably grow on its own for users who are increasingly mobile. The real threat to wireline services is coming from fiber optic service that can offer speeds an order of magnitude or two above wireline bandwidths. But, then again, isn't fiber just a glass version of traditional wireline?

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