Canada’s “Pre-WiMax” Solution

Why wait for WiMAX when there’s NextNet Wireless? That’s the thinking
behind yet another major wireless Internet service provider (WISP) initiative
based on NextNet’s proprietary 3G-based Expedience technology, this time in
Canada.

A yet to be named joint venture between a major wireline service provider
and one of the country’s four national mobile phone carriers last month launched
high-speed wireless Internet service in two markets — Richmond, a suburb
of Vancouver on the west coast, and Cumberland, a small rural area near Ottawa,
the nation’s capital in eastern Ontario.

The new company is also doing test marketing with AOL in downtown Toronto. The partners say they
will eventually roll out across the country, though they won’t say how fast
or how many markets will ultimately be covered.

The partners are Allstream ,
one-time partner of AT&T in the Canadian
market, and Microcell Telecommunications,
a mobile network access provider and operator of the Fido cellular service,
plus NR Communications, a U.S.-based telecom investment firm headed by ex-McCaw
wireless veteran Nick Kauser.

NR is providing the wireless equipment. Allstream brings cash and a backbone
wireline network for wireless backhaul. Microcell, through its subsidiary
Inukshuk, will provide the 2.5GHz licensed wireless spectrum to be used, plus
its nationwide network of cellular towers.

"We’re leveraging the strengths of all three partners, which is unique,"
says Ron McKenzie, Allstream’s senior vice president for strategy and corporate
development. "If one party had to do it on its own — build the backhaul,
build out the rights of way, build the customer solutions and so on, it would
be very difficult or impossible."

By joining forces, the partners were able to get the service up and running
in the first two markets very quickly — within a matter of months, McKenzie
says.

They chose the first markets carefully to get a read on customer behaviors
in different types of markets. Richmond is a "tech-savvy suburb,"
Cumberland is a rural area (though close to Ottawa, one of Canada’s high-tech
centers) and Toronto gives the partners experience in a big city core.

"In each case, it gives us an idea of market segmentation and adoption
rate," McKenzie explains.

He won’t talk about the timetable for rolling out to the rest of the country.
The schedule is still being finalized, and he doesn’t want competitors to
know what the company is doing. He implies the coverage footprint will ultimately
map fairly closely to the coverage footprint of Microcell’s Fido
cellular service, which takes in all the major population centers in the country.

"We’re going to aggressively deploy this in the marketplace, we will
have a national network and footprint," McKenzie says.

The joint venture company is wholesaling capacity back to both Microcell
and Allstream, which will function as WISPs offering access services directly
to end customers, sometimes in competition. The joint venture is also hoping
to attract other retail ISPs from outside the consortium.

The service will be up to 2.2 Mbps shared, and is designed to deliver as
good throughput as cable or DSL, or better, McKenzie says.

Allstream has mainly focused in its core business on large and medium-size
enterprises since it discontinued consumer services after a restructuring
a year ago. It is using the network to offer a $60-a-month unlimited-download
business Internet service that includes e-mail addresses and domain name hosting
services.

"The wireless joint venture is the ideal platform for us to extend our
offering to remote branch offices and telecommuters," McKenzie says.
"Or it provides the platform for us to expand into the small business
market.

Microcell will concentrate on the consumer market. Subscribers to its iFido
service pay $40 a month for Internet access service that has some download
limits. They can also bundle Internet service with wireless telephony as a
replacement for local wireline service.

The NextNet technology supports supposedly telco-grade voice services along
with high-speed Internet. Allstream will also offer voice services eventually.

So why NextNet?

McKenzie says the partners are relying on the strong endorsement of Kauser.
After analyzing all the wireless technologies available, his team concluded
that NextNet’s was the best. It’s not just on Kauser’s say so, though.

NextNet uses licensed spectrum. "That’s a very important part of the
value proposition from a security and reliability point of view, McKenzie
says. "We want to deliver a telco-grade service, and to do that we have
to do it over licensed spectrum."

NextNet’s is a true non-line of sight technology. Subscribers don’t need
any additional software or antennas. The hardware — a paperback book size
device that plugs into a computer’s Ethernet port — has encryption technology
and a smart antenna built in. It automatically connects to the network and
sets up the service.

"That creates an out-of-box experience for subscribers that is plug
and play, and that’s very important," McKenzie says. It also means no
truck rolls for Allstream and Microcell, another important plus.

The NextNet technology offers long reach. A single base station can cover
a radius of up to 20 miles. The joint venture can create broad corridors of
coverage within which subscribers will be able to use the service anywhere.
Given the size of the NextNet interface device, this service is in effect
portable, even mobile.

"That portability is a very welcome feature, especially for small businesses,"
McKenzie says. "Why should they pay for a service at work and also one
at home when they can get this?"

It also opens up the possibility not just of roaming within a local coverage
area, but roaming to other Allstream markets. The company at this point has
no plan to charge subscribers a roaming fee to move between markets, McKenzie
says.

Negotiating roaming agreements with other NextNet-based service providers
is also a possibility. "We see that as a potentially significant value
for customers in the future, but there are no immediate discussions [with
roaming partners] underway," he says.

NextNet’s proprietary technology is not the anti-WiMAX, McKenzie points out.
NextNet now sits on the WiMAX forum and its technology adheres to the basic
principles of the evolving standard in as much as it uses OFDM [Orthogonal
Frequency Division Multiplexing] and non-line of sight technologies.

We’re not sure if NextNet exactly adheres to the spirit or intent of WiMAX,
but the fact is, it’s here now and WiMAX isn’t — and, as McKenzie notes,
it seems to work.

He won’t say how many customers the company is signing up, or the growth
rate: "What I am willing to say is that the two service areas announced
in March are both way ahead of their schedules [for signing up customers.]"

NextNet WISPs seem to be sprouting all over the map. The company has deployments
in 20 markets around the world now, including in the U.S. (Evertek,
Plateau Telecommunications, Grand Forks Wireless), Canada, Latin America,
Asia, and Africa.

Wireless companies should note this well. NextNet threatens not just the
potential future market for WiMAX products, but also the market for Wi-Fi
hotspot and hotzone services. In theory, subscribers to NextNet-based services
don’t need hotspots.

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