Broadband Central, a Draper, Utah, start-up using Wi-Fi technology, plans to sell wireless broadband connections to residential customers in the Sacramento region beginning in September
Sacramento Business Journal | August 8, 2003 print edition | Mark Larson
The company is the first with plans to blanket the area with broadband antennas, creating what the company calls “blue zones.” The goal is to sign customers who either physically can’t get fast Internet connections or who want a low-cost alternative to access over phone lines, cable fiber optics or the few existing wireless links.
Rivals include telecom giants SBC Communications Inc. and Verizon Wireless, which this week announced plans to expand the use of Wi-Fi technology. SBC said it would create a network of 20,000 Wi-Fi access points nationwide, aimed mainly at commercial locations.
Broadband Central says it will charge at least $19.95 a month and is chasing the “low-hanging fruit” of potential residential customers. It’s not the same Wi-Fi now showing up in cafes, because home computers would still be wired to an outside antenna that would then send and receive data from Broadband Central antennas.
” We intend to cover the entire Sacramento area,” said company spokesman David Politis. “We’re not announcing the (local) cities and neighborhoods we’ll be deployed in, but we’re doing site surveys now.”
Faster than digging a ditch: Wireless Internet connections cost less to install than fiber or cable, and take less time to deploy. But the platform is less secure than other Internet connections, some analysts say, and like any technology it could be made obsolete by something better.
Nevertheless, investors apparently aren’t afraid to take a risk on Wi-Fi.
Intel Capital, the investment arm of the technology giant, last autumn announced it would invest $150 million in its Wi-Fi ventures. Its Cometa Networks, a joint project with International Business Machines Corp. and AT&T Corp., is building a national network of “hot spots” where people with Wi-Fi-compatible laptops can go online without wiring their computers into anything.
Intel is targeting the laptop market for the Wi-Fi chips; wireless access is expected to be a common feature in portables.
Business users are the intended mass market, although retailers such as McDonald’s Corp. and Borders Groups Inc. plan to install Wi-Fi hot spots in their shops for customers.
Broadband Central sees green in people who want low-cost broadband connections at home.
Early last month the company inked a $17.5 million sponsorship agreement with Accelerated Communications Corp. of Lehi, Utah, to deploy blue zone antennas in California, Georgia and Texas over the next year. All in all, Broadband Central has announced plans to launch its services in 3,700 blue zones, also including Arizona, Idaho, Georgia, Nevada, New Mexico, Texas, Oregon and Washington.
Chief executive officer Tali Haleua said the company intends to deploy a nationwide network faster than its competitors can.
How they do it, what it costs: Each blue zone beams wireless broadband connections to users within a half-mile radius. The company installs a 22-inch cell site in each zone, connected to three antennas. Customers get an eight-inch antenna attached to their dwelling on an outside eave, wired to the client’s computer.
Broadband Central is trying to undercut the typical broadband charge of around $50 a month and up. Its transmission speeds start at 128 kilobits per second, comparable to Integrated Services Digital Network (ISDN) speed and about 10 times normal dial-up speed. For about $30 a month, it offers 256 kbps, which is comparable to DSL, or Digital Subscriber Line, speeds offered over copper phone lines.
For $40 a month, users can get cable modem speeds of 512 kbps, and $50 gets 1 megabit per second.
In Sacramento, SureWest Broadband offers Internet connections at the blazing pace of 1.5 megabits per second. The local company offers that access, plus phone and pay TV services, for around $100 a month. It also offers DSL services in parts of its market.
A SureWest spokesman on Tuesday said the company had no one available for comment on the local Wi-Fi competition.
One small startup, called FastKat Wireless, has set up wireless Internet service for residents in a five-mile radius of Diamond Creek, a home development near Roseville. Entrepreneur Craig Fine pooled $112,000 in investments to set it up. It sells 1.5 megabits of broadband connectivity to local subscribers for $60 a month plus $260 for hardware to receive the signal.
His move, begun in September, was prompted by the large gap in broadband service in the area. He’s pulled in a reported 150 customers so far, and hopes for 500 over the next year.
Skepticism: Broadband Central was started in November by co-founders Tali Haleua, Randy Conklin and Jon Webb with undisclosed capital. The company shares profits with sponsors for specific blue zone antennas. It doesn’t give out specific financials.
Tom Reiman, a Sacramento-based broadband consultant, doesn’t see Wi-Fi competitors such as Broadband Central as a threat to the market base of cable, phone or fiber-based broadband vendors.
” The technology was never built for security, even for narrow band data connections,” said Reiman. “It’s a nice niche, a proven technology. But it’s quickly outdateable. Change is constant in this area.”
Of Broadband Central’s deployment plans, he added, “Anytime there is a rush to install, I’m nervous about it. Things change too fast.”
Reiman sees Wi-Fi Internet connections as best for Web browsing and “one-way connectivity, not uploading.”
But Keith Waryas, a Wi-Fi market analyst with International Data Corp. in Massachusetts, said he’s not sure there’s a huge security risk in the use of Wi-Fi. He’s also not sure that the current Wi-Fi technology will be quickly surpassed.
A next-generation system, Wi-Max, covers about 30 miles but its standards have yet to be approved.
Waryas hasn’t seen any applications for Wi-Fi in the homes, but sees logic in Broadband Central’s move. Installing it costs less, theoretically reducing prices to the customer.
Still, he sees some big hurdles for the company, including the Internet broadband connections of the antennas. He’s skeptical that a phone company selling competing DSL service would be anxious to sell the company Internet connectivity for its blue zones.
And he wonders about the negotiations to put antennas on telephone poles. Those poles, he said, are the most efficient places to put antennas, but they’re highly regulated, and using them can be costly.
” I would not dismiss them offhand,” Waryas said of Broadband Central. “At the same time, you have to take it with a grain of salt.”
Still a tough gig: In the late 1990s, many fiber-optic companies loaded with venture cash had ambitious deployment plans for high-speed Internet services that went south when their investment cash dried up. One reason that happened was that the companies were overextended and profits were too far off for investors to keep in the game.
Broadband Central may not be comparable to a fiber venture of only a few years ago. But, Reiman cautioned, “There’s no magic in this business, and there are no easy solutions. The consumer is very demanding.”