Why Not WiMAX?

When it was time to start hosting his online restaurant guide on in-house servers, Terence Chow, 44, was surprised to find that broadband didn't reach his little corner of San Francisco.

So the founder of Restaurants.com, which was launched in 1999 and has $50,000 in annual sales, looked across the bay to Fremont, California-based NextWeb; the next day, his servers were transferring data at 1.5Mbps for about half the price of a same-speed T1 line. Chow doesn't connect over a line--his data travels through the air, care of a new technology that dozens of ISPs like NextWeb are rapidly adopting.

WiMAX is a new wireless option for entrepreneurs either unserved or under-served by fixed-wire cable, DSL or T1. It may not be in your town yet. Technically, it won't be anywhere until year's end, when the WiMAX Forum starts certifying the interoperability of this kind of transmission gear.

But pre-WiMAX services are already available in dozens of cities nationwide at the kinds of cut-rate prices Chow enjoys. Both startup and long-standing wireless ISPs are switching over to better wireless transmitters at a pace analysts expect will bring WiMAX to America's 50 largest urban centers and countless rural areas by the end of the year.

In 2006, once WISPs can mix and match gear from multiple suppliers, commercial rollouts will zoom, says Jeff Thompson, president of TowerStream in Boston. WiMAX users won't notice that watershed because, unlike Wi-Fi, customers don't buy access points. But the point of standardization is to drive down equipment costs--and in open markets, those savings tend to filter down to customers.

Ultimately, Thompson says, you'll pick up a small WiMAX modem for Wi-Fi prices at Best Buy or CompUSA, then choose from a variety of service providers. Early wireless entrepreneurs also plan to broadcast to portables and handhelds when Intel starts shipping Wi-MAX radios for those devices--by 2006 or 2007.

The Air up There

We tend to assume that America's cities are covered by wired broadband service, but many urban pockets aren't close enough to a telephone switching office to get robust SDSL, and TV cable doesn't reach many business districts. Also, neither truly serves small communities in much of rural America.

"T1 is an option [in rural areas], but [it's] extremely expensive," says Philip Solis, senior analyst for ABI Research. "The cost is several times that in cities, and installation typically takes 60 to 90 days."

For businesses too large for low-bandwidth/low-quality consumer services and too impatient for T1, WiMAX offers a range of bandwidth, quality of service and easy installation. When Mass Connections of Cerritos, California, needed to back up its T1 line, it chose wireless service from Aiirmesh Communications in addition to a second T1 line (cable doesn't reach it). A designer of in-store marketing promotions in shopping centers nationwide, Mass Connections needs to maintain direct, high-speed connections with clients and subcontractors, even on nights and weekends. And Mass Connections pays Aiirmesh less than half the monthly rate of its T1 line.

Wireless transceivers still cost enough that most WISPs will initially focus on high-bandwidth business customers. But it's so much cheaper to add wireless points of presence than to lay cable that some of these small ventures are already challenging the large, better-capitalized telephone and cable companies, says Solis.

For example, advantaged by its license to a prized portion of the radio spectrum, Clearwire offers consumers and home offices in Florida data rates of 512Kbps for as little as $25 per month. Similarly, NextWeb has been surprised by how many requests it gets from customers supposedly served by fixed wire, says NextWeb's Eric Warren. NextWeb now reaches 175 cities in California's most urbanized areas, with a guaranteed minimum 512Kbps symmetrical service that can burst to 3Mbps for $159 per month.

Short-term, expect WiMAX providers to offer a little more for a little less than wired services, says In-Stat/MDR senior analyst Keith Nissen. Although WiMAX has the potential to beam data 70Mbps, WISPs will do so only as data appetites rise for applications like video on demand, videoconferencing and VoIP. IP phone service, in particular, is likely to be a part of most wireless service plans.

It's impossible to predict WiMAX's future. Broadcasting is challenging, but the stage is set for the kind of entrepreneurial gold rush and unforeseeable innovation that we saw with Wi-Fi and VoIP. It's a now-familiar paradigm: An open market meets a better technology, and new levels of productivity break loose.

Mike Hogan is Entrepreneur's technology editor.