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U.S. Broadband Market On The Decline

Expectations are high for emerging technologies such as wireless broadband, but challenges still remain.
The United States is falling further behind other developed countries in broadband network deployment. According to statistics released in April by the Organization for Economic Cooperation and Development, the United States ranked 15th among the OECD's 30 member countries in broadband deployment at the end of 2006.

That's three spots below the United States' place on the list a year earlier, and signs point to a continuing decline: The country ranks 20th in the growth rate of broadband penetration.

So dismal is the progress that the Federal Communications Commission has launched an inquiry into the state of the U.S. broadband market, focusing on the question of "net neutrality"--whether big carriers and service providers are prioritizing voice and data traffic for some customers at the expense of others.

Against this backdrop, expectations for wireless broadband are high. Wireless broadband is seen as a "third pipe"--in addition to DSL and cable TV--into homes and businesses, as a way to spark competition between incumbents and new entrants that leads to new services, and as a way get the United States on par with other countries in overall broadband availability.

Wireless broadband providers face challenges in getting from here to there. For one thing, customers could face an alphabet soup of competing specifications just as they do on today's cellular networks. There are already three competing versions of mobile broadband--EV-DO, Long-Term Evolution, and Mobile WiMax--and a fourth, the IEEE standard 802.20, is emerging.

Among major U.S. carriers, Sprint Nextel and Verizon Wireless have rolled out EV-DO networks and are in the process of upgrading to the "Revision A" version of the service, while AT&T Wireless (formerly Cingular) and T-Mobile are focused on the road map to Long-Term Evolution, known as LTE.

Meanwhile, Sprint and a well-financed startup, Clearwire, have announced plans to build nationwide WiMax networks. Despite rumors of a delay, Sprint is sticking to its timeframe for a "soft launch" of its WiMax service by the end of this year and commercial service in at least 19 markets by mid-2008, with 100 million points of presence by the end of 2008.

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Essentially the next step on the evolutionary road map for 3G cellular networks, LTE has strong carrier support as well as the attention of major equipment vendors. Ericsson in March disclosed that it was shutting down its WiMax development effort to concentrate on LTE. To bridge the present with the future, handsets and other mobile devices developed for LTE networks will be compatible with today's 3G UMTS networks and, most likely, 2G (GSM/GPRS/Edge) networks.

At this point, however, the LTE standards have some catching up to do. Wireless consultant and author Martin Sauter puts the WiMax standards 12 to 24 months ahead of the LTE work.

SPECTRUM SHORTFALLS

Advances in wireless broadband will depend to some extent on the availability of radio frequency spectrum. WiMax's chances of success, for example, largely depend on restrictions being lifted on use of the 2.3-GHz to 2.5-GHz band, writes analyst Patrick Donegan in Dark Reading's "The Future Of Mobile Broadband" report.

In the United States, the upcoming FCC auction of spectrum rights in the 700-MHz band, considered prime real estate for wireless broadband services, is a milestone for the development of a national network for both commercial and public-safety wireless systems. Already delayed several times, that auction is scheduled for late this year.

In last year's auction of spectrum for advanced wireless services, 96% of available bandwidth was snapped up by the major carriers. Former FCC chairman Reed Hundt is heading a startup called Frontline Wireless, created to build a hybrid nationwide wireless broadband network that will carry commercial traffic but be available to public-safety agencies in times of emergency. Hundt and his group contend that the 700-MHz auction, which will sell off spectrum currently held by TV broadcasters and scheduled to be relinquished as they move to digital TV, is the "last chance" to create a nationwide public-safety network and to provide U.S. residents with true wireless broadband.

"Everyone understands that we will either have a robustly competitive wireless broadband industry or we won't," says Hundt, in anticipation of the 700-MHz auction. "And we'll either finally solve the problem of a national public-safety network or we won't." Hundt wants the auction to be structured so that startups like his will be able to bid competitively against the major wireless carriers.

FCC chairman Kevin Martin apparently agrees. "One of the things that I think we need to do is [consider] the potential to have some synergies between the two, some public-private partnerships that would allow for cross-utilization of the spectrum," Martin said during a public presentation in Silicon Valley earlier this month.

The proliferation of wireless broadband technologies should lead to lower prices, better network performance, and increased availability. That's the theory--but not today's reality.

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