News Release Details

Message from the CEO: The Importance of the Wi-LAN / Radionet Networks in Vantaa and Mantsala, Finland

06/18/2004


There are two elements that I would like to highlight with regard to the new Wi-LAN / Radionet networks in Mantsala and Vantaa, Finland. These two elements are the nature of the network owner and the architecture of the network. These elements contain in them the essence of the disruption that will be caused by the new Wireless MAN technology based on W-OFDM which will be standardized and made interoperable by the WiMAX Forum over the next year or so.

First, the network owners are electric utilities that are now supplementing their service offering by providing wireless data services to their customers. As competitive companies offering broadband services, they are the type of entrants into this market that are capable of causing disruption to all the incumbents. They hold many advantages:

  • They have the customers. Everyone who has electricity is a customer of the utility. The marketing of a new offering to these customers is therefore incredibly simplified.
  • They have the billing systems already in place. Thus, back office functions don't have to be created from scratch, as is the case with new Wireless ISPs.
  • They own electric towers, power poles, and rights of way, which means that they can install the network infrastructure on their own property. This resolves the problem of having to get rights to place antennas and base stations.
  • They have their own fiber optic backbone. Many electric utilities have fiber along their power line right-of-ways. They use it for monitoring and data collection. However, the capacity of that fiber is hugely underused. balance sheet. Access to capital is one of the major problems with wireless Internet service providers (WISPs) and has slowed down the market growth of these systems.
  • They usually have a healthy cash flow

Because of all the above reasons, in my opinion, electric and other utilities should be the nightmare competitor of the traditional telecommunications companies. However, all this is useless if the network can't be profitable. This brings me to my second point; the network architecture is fundamentally sound and profitable.

Radionet has deployed a hybrid WLAN/WMAN network. They have beefed-up WiFi Access Points, which extend the range up to approximately one km. The coverage zone is called a hot-zone in contrast with a 50-100m radius hot spot. They also have the MAGE IP system, which allows for seamless roaming between different hot zones. The hot zones are backhauled by WMAN systems like Wi-LAN's Libra 3000 product. Additionally, for large customers where a high level of quality of service and guaranteed data rates are required they place a Wi-LAN CPE at the customer site. In these cases the revenue per customer easily justifies the cost of the CPE (even at today's prices).

The structure of the network makes it easy to deploy, benefiting from W-OFDM's non-line-of-sight capability to backhaul the WiFi hot zones. The capacity of the Libra 3000 means that there is no choking of the overall throughput, as happens in cases where the backhaul of the WiFi is done through DSL or cable, with their limited bandwidth. As the last few hundred meters is done by WiFi systems the cost of equipment is divided amongst a large number of individual customers. Therefore the revenue per unit is high enough to guarantee the profitability of the network. With the roaming capability and complete coverage of a city we now have the promise of broadband wireless access anywhere, anytime and at a very affordable price.

The network then has the inherent advantage of wireless that cannot be matched by any of the landline methods: mobility! Furthermore, for the end customer the cost of ownership is lower. They do not need to purchase their own WiFi AP or router. They are connected to the network wherever they are with their WiFi enabled laptop or PDA. Intel with its Centrino has helped make this network even more cost effective since owners of recent laptops do not even need to fork out $60 for a PCMCIA WiFi card. Thus the economic challenge of most networks, providing the broadband wireless access service to the individual residential customer, has been resolved in a most elegant way.

The challenge faced by the Broadband Wireless industry to date has been: how do the network operators offer differentiated service to compete with DSL and Cable broadband offerings in a cost effective and profitable manner. Radionet's implementation of the Vantaa network (soon followed by the Mantsala network, and with many more networks in the planning phase) proves that this challenge can be met and overcome. I believe that as this realization spreads amongst the service providers we will begin to finally see significant growth of the broadband wireless industry.

Dr. Sayed-Amr (Sisso) El-Hamamsy
President and Chief Executive Officer

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