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Fixed wireless - or fixed stupidity?


They are dropping like flies. Fixed wireless companies were supposed to be a juggernaut, a force, a new trend that was going to bring competition to the local loop. Brilliant people, marvelous technology - what happened?

Advanced Radio Telecom? Bankrupt. Teligent? Bankrupt. Winstar Communications? Bankrupt. Anyone detecting a pattern here?

Then there was the unlicensed spectrum play. The idea was, why pay a fortune for spectrum when you could use the spectrum in the 2.4-GHz and 5-GHz ranges for nothing. Sure, other carriers could use this spectrum as well, but wouldn't this be great for the 21 million households that have two phone lines and would like Internet access at high speed? Plus, weren't there some great providers of 802.11 technology coming into the market (Cisco, Nortel Networks, Breezecom)?

Then reality pays a visit. Using fixed wireless in competitive local exchange carriers just isn't working in the U.S. The concept might work overseas - in the Third World. Or it might work in residential situations - but that residential customer is soon going to become as demanding as the business customer. Yes, cable providers are pulling back from their cable modem pronouncements, and with some local exchange carriers you may not see DSL in your neighborhood until the 100th anniversary of the last Red Sox World Series win (1918). Still, fixed wireless is a technology looking for a market.

Football coaches sometimes say, "We never lost a game, but sometimes the clock ran out." Fixed wireless executives say, "We really didn't go bankrupt; we just ran out of money."

What went wrong?

First, for businesses, fixed wireless is considered less than reliable. There are 7.5 million small businesses in the U.S., a market that fixed wireless was going to help by offering exceptional service at a lower price. In the end, the fixed wireless industry provided neither.

Second, the best use of a fixed wireless system for large companies was as a back-up system. Why trust Verizon or BellSouth never to go down when for a small investment you could at least hobble along with a fixed wireless solution? Nice idea, but not enough to build a business on.

Third, the money ran out. The amount of debt by the world's carriers has gone from $255 billion in 1998 to more than $700 billion today. All that nice equipment-leasing money has evaporated. The junk bond boys seemed unable to raise cash for the fixed wireless industry.

Look at Teligent. Management: Alex Mandl, a bankable man. Investors: Microsoft, Liberty Media/AT&T, NTT. Money raised: $2.6 billion. Current status: unable to raise another dime.

The government's telecom policy from 1968 to 1995 was to encourage competition in long-distance. Mission accomplished. The government's policy from 1995 on was to encourage competition in the local loop. Mission aborted. Fixed wireless was supposed to be a neat-o way to provide services to businesses and residences without digging up every street in every urban center. The idea was to "hop" to key buildings and use the risers in the buildings to deliver services to businesses on each floor - in other words, instead of coming in through the street, attack by air.

Nice thought; bad execution. I bought into the idea and signed a contract with Winstar. The network crashed - and Winstar had no idea what was wrong. This is a company that one year ago carried a market cap of $10 billion and today is worth zero. The idea at Winstar was to get big fast, believing that AT&T, WorldCom or one of the European carriers would acquire the company because it had solved the "last mile" problem. Did Winstar have a management problem? The damn company was a children's crusade: completely clueless.

The morning after my network crashed, I called Verizon - by cell phone, of course - and begged them to please, please take me back.

Fixed wireless: the not-ready-for-prime-time solution.

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Anderson is senior managing director of Yankeetek, a Cambridge, Mass., venture incubator. He is also chairman of The Yankee Group and the William Porter Distinguished Lecturer at the Massachusetts Institute of Technology. He can be reached at

handerson@yankeetek.com.

Read more of Anderson's Yankee Ingenuity columns.


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