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Alternatives Sought for Broadband

Simon Romero.
Produced by
The New York Times

March 20, 2001

What does the market for high-speed Internet access have in common with soaring, the sport in which pilots glide along currents of air in sailplanes without engine power? A healthy dose of risk, if Marc E. Arnold's ambitions are any indication.

Mr. Arnold, an avid sailplane pilot, is the chief executive of Angel Technologies, a St. Louis company that plans to provide high- speed Internet access in an unusual way: using solar-powered, high-altitude manned aircraft built to cruise at 51,000 feet, or more than 10,000 feet higher than the altitudes normally reached by commercial jets. Under Angel's plan, the aircraft would beam high-speed Internet service to customers in large cities, who would receive it on small cone-shaped antennas.

Pinning its hopes on what it views as a cheaper alternative for fast Internet service than its primary competitor — the satellite industry — Angel plans to test its network next year and provide commercial service in 2003. The company has identified 200 cities worldwide as potential markets.

In addition to the expense of building or acquiring three planes for each metropolitan area, Angel's complicated plan involves using huge quantities of jet fuel, hiring two pilots for each plane and making three takeoffs and landings every day for each city where its service is available.

"We believe the appetite for bandwidth will continue to grow as it did for processing speed; that's why we're thinking so far outside the box," said Mr. Arnold, 43.

Far outside, indeed. But then again, Mr. Arnold is someone who escapes from the rigors of an Internet start-up by flying his own sailplane on far-flung expeditions. His next soaring trip is planned for later this year, above the semiarid steppe of Patagonia, in southern South America. Mr. Arnold dreamed up the idea for high-altitude fast Internet access after his experiences with soaring in the early 1990's.

Though Mr. Arnold's broadband plan may be more blue-sky than most, it is indicative of the restless energy gripping the industry. The adventurous are seeking alternatives to the most common ways to offer high-speed, or broadband, Internet access — namely, over cable networks or on digital subscriber lines that use a phone company's wires.

Much of the entrepreneurial energy is fueled by problems in the digital subscriber line, or D.S.L., industry. Under the Telecommunications Act of 1996, phone companies were required to open their networks to independent providers of voice or data communications to encourage competition.

But too often the result has been confusion for consumers and companies. If someone chooses a small Internet service provider, that provider often must go through a wholesaler, which in turn must coordinate service with a local phone company.

That confusion was compounded by the technical intricacies of D.S.L. service. Densely populated areas like Manhattan, for example, may not have enough available phone lines for consumers to get D.S.L. Consumers usually must live within a certain distance of a local phone company's switching office — often, three miles or less — for the technology to work. And installing and repairing D.S.L. lines are complicated, requiring highly trained technicians.

Several small Internet service providers have gone out of business in recent months, while some of the large D.S.L. wholesalers are hardly better off. For instance, NorthPoint Communications and Flashcom have filed for bankruptcy protection, while Covad Communications and Rhythms NetConnections have recently announced layoffs to stay afloat.

Largely because of problems at D.S.L. companies, the broadband industry as a whole has fallen short of once-grandiose expectations. Only about 7 million of 100 million homes in the United States had broadband access at the end of last year — 4.9 million of them via cable modems and 2.4 million through D.S.L.

Despite cable broadband's greater popularity, it, too, has drawbacks. Because cable networks operate on a shared basis, some users are concerned about the safety and privacy of their Internet data. Others complain of traffic jams when the systems are crowded. And it is too early to gauge the consumer impact of the Federal Trade Commission's requirement that AOL Time Warner open its cable networks to competitors.

With cable and D.S.L. companies facing problems and uncertainties, it is no surprise that several companies are seeking to provide broadband alternatives. But each of the new offerings involves its own risks.

Large communications companies like WorldCom and Sprint are already providing so-called fixed wireless broadband service, a type of wireless access for homes and office buildings that uses spectrum the companies acquired in costly auctions held by the Federal Communications Commission. Fixed wireless systems have the advantage of bypassing the existing local phone and cable networks.

There are an estimated 200,000 fixed wireless users in the United States, according to Cahners In-Stat, a technology research company. But the technology is not for everyone. Most fixed wireless systems require data to travel in a line-of-sight fashion, meaning that walls and even foliage can disrupt transmission. Moreover, their geographic reach is generally limited.

Another high-speed wireless alternative is offered by Metricom of San Jose, Calif., which built its own data network using different technology from that of fixed-wireless counterparts in cities like San Francisco and New York. But since Metricom's system began operating last year, its subscriber base has failed to grow beyond 30,000 or so after potential customers balked at the price — about $70 a month, compared with normal high-speed charges of about $45 a month. Its chief executive resigned last month, and its stock, which reached a 52- week high of $82.88 in March 2000, closed on Friday at $3.125.

Another bet is broadband satellite service, provided by companies like Tachyon, based in San Diego, and Hughes Network Systems, of Germantown, Md. The main draw of satellite broadband is that it can reach areas not served by cable or D.S.L., and there are about 100,000 households with satellite broadband service, according to Cahners In-Stat.

But satellite broadband systems can be expensive and complicated to install. And some customers have complained about "latency," a term for the delays caused by distances of more than 22,000 miles that signals must travel to and from satellites. Rainfall can also cause short delays.

And companies only recently began to offer two-way satellite service that does not require a phone line. For example, StarBand Communications, which began offering its service late last year, charges about $60 a month, while outlays for an antenna and software can run $400 to $900.

Some broadband approaches are even further afield. Main.net, an Israeli company, has developed technology that makes high- speed Internet access available over low- voltage electricity grids. The system is still under development but is expected to be available in Germany later this year.

Then there are optical service providers like IntelliSpace, which sells broadband services to businesses through its own fiber optic networks. IntelliSpace says it "provides the fastest connection to the Internet in the world," about 6,500 times faster than the high-speed Internet connections sold by local phone companies.

Where will it all end? Will the difficulties faced by D.S.L. companies like Rhythms and NorthPoint pave the way for a wider variety of high-speed Internet options to gain acceptance from consumers and businesses? Or are their troubles the first chapter in the bursting of a broadband bubble?

"It's too early to tell at this stage in the game," said Michael Harris, president of Kinetic Strategies, a broadband research company in Phoenix. "The only thing we know is that cable and D.S.L. have been highly inefficient in satisfying the demand for broadband."

Or, as Mr. Arnold, the sailplane pilot turned entrepreneur, put it: "There's a glut of capacity on existing networks but a shortage of possibilities for people in need of a connection. They don't care how crazy the solution is as long as it works."

(c) Copyright: The New York Times

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