Broadband Alternatives to Cable and DSL Entering Market

While cable modems and DSL residential services currently dominate the North American high-speed Internet marketplace, alternative broadband technologies will be introduced to an increasing number of customers over the next few years, according to research by Park Associates.

These alternative technologies, which will include multipoint, multichannel distribution services (MMDS) [definition] will grow to a market share of 17 percent by the end of 2004, according to Parks Associates “Broadband Access @ Home” research.

MMDS broadband has only recently gained credibility as a technology for broadband Internet service. MMDS has been used successfully for more than 30 years to provide one-way wireless cable television service, but recent upgrades to two-way, full-duplex capacity have granted it better standing in the field of broadband technology, according to the research.

“Many industry analysts remain skeptical of MMDS’s commercial potential as an alternative broadband-to-the-home technology,” said Mike Greeson, consulting analyst for Parks Associates. “Many analysts have characterized the market potential of MMDS as limited to those who remain beyond the footprint of either DSL or cable services, such as rural residents, where such deployment remains financially unattractive. However, recent deployments in major metropolitan areas are challenging this notion and will ultimately challenge the dominance of cable and DSL in the larger broadband marketplace. Even our most conservative projections lead us to believe that these alternative technologies will own a much larger market share than most industry analysts have predicted.”

In recent years, telecom giants Sprint and MCI WorldCom have rushed to snap up existing one-way MMDS licenses and applied for two-way licenses in many other areas. Sprint has clearly established itself as a market leader, Parks found, being the first major communications company to offer wireless Internet service to residential subscribers. Sprint plans to have MMDS services operational in 20 markets by the end of 2000, with 50 more markets added by the end of 2001. By that time, the footprint for Sprint MMDS Internet services alone could exceed 30 percent of the US population.

Among the other MMDS players, MCI WorldCom has filed 60 FCC applications to establish two-way MMDS service in markets across the country. The Company plans a national rollout for its fixed-wireless Internet service by the fourth quarter of this year, with services offered in 60 markets by year-end 2001 and 100 by year-end 2002. Nucentrix Broadband Networks, a broadband service provider focusing on MMDS services, has filed applications for two-way services in 70 markets across Texas and the Midwest and recently announced the successful completion of an initial technology trial with Cisco Systems in Austin, TX. Following regulatory approval, Nucentrix plans to launch fixed-wireless broadband services in at least 20 markets by the end of 2001.