CONDICIONES DE ÍNDOLE FACULTATIVO

By choosing to rent instead of buy, StarBand and its partners have an early lead in the two-way market, but first-mover advantage not does guarantee long-term success. With the inherent technical issues imposed by sending packets 23,236 miles into space and back, StarBand must con- tend with relatively high customer premises equipment (CPE) costs, labo- rious installations though independent contractors, its multiple owners, and trying to turn a profit.

Early on, former controlling partner Gilat, which manufactures the VSAT and modems, realized it would need experienced distribution part- ners to move StarBand’s service. EchoStar, under pressure from Wall Street to come up with a wireless data broadband offering, put an initial $60 million into the venture.

For a variety of reasons, EchoStar (http://www.dishnetwork.com/content/ aboutus/index.shtml) was recently forced to pump another $60 million in StarBand and effectively take control of the company. Several insiders

have speculated that EchoStar was not providing sufficient attention to the project early on. The company was forced to get involved when Star- Band management, mostly brought over from Gilat, led the fledging company through a series of rollout missteps.

After the latest round, EchoStar’s equity stake in the company is 32 percent. Through Echostar, StarBand has plans to launch its own satellite in the coming years, and at that point EchoStar’s equity stake will climb to 60 percent.

The partnership allows StarBand to take advantage of 34,000 Dish retailers with the two companies comarketing services as a single, bundled product. Many of EchoStar’s roughly 7 million current Dish DBS sub- scribers have StarBand written all over them. The EchoStar relationship is not exclusive, however. In addition to its StarBand investment, EchoStar has thrown another $60 million into StarBand’s competitor, WildBlue.

For small and midsize ISPs looking to become StarBand retail part- ners, the company has not yet set up a formal program (see sidebar, “Small Wireless Data ISPs”). A number of StarBand’s Dish resellers have their own programs that vary from shop to shop. StarBandDirect.com, an independent online StarBand reseller, originally intended to offer a reseller program that paid a $105 commission per StarBand sale, but was forced to drastically cut the commission percentage after experiencing huge installation problems that made the economics unfeasible.

Small Wireless Data ISPs

Factories with high-current electrical equipment, arc welding, and high-intensity lighting cause radio-frequency “pollution” that is extremely challenging to RF systems. For example, Cirronet (http://www.cirronet.com/), to meet the challenge, made good use of its robust wireless data technology in developing a wireless data system for ISPs. Cirronet’s WaveBolt is very purposefully designed for the unique requirements of the small to medium-size wireless data ISP market:

Its signal allows reliable operation in the crowded 2.4-GHz license-exempt spectrum worldwide.

Its customer premises equipment (CPE) component (subscriber unit) is designed to be installed by customers, so no expensive truck roll is required.

Its CPE device is under $400, including (Cirronet claims) the amortized cost of the base station.

The subscriber unit is remarkable in its simplicity: a small plas- tic “brick” with mounting tabs and a 125-ft cable. All of the RF elec- tronics and a 90° flat panel directional antenna are contained in the subscriber unit.

The customer mounts the subscriber unit on the side of the structure closest to a base station and routes the cable inside, where the cable is connected to an ac adapter and a universal serial bus (USB) adapter, which are then connected to a computer’s USB port. An earlier version of WaveBolt, called SsuRFnet, is connected to a computer’s serial port, with a maximum speed of 115 kbps.

To the computer, the WaveBolt customer unit appears as a modem device and uses Windows’ built-in dial-up networking. A single .INF file is installed on the computer to initialize the cus- tomer unit, and, once loaded, the customer is then able to connect to the base station.

Cirronet was one of the first companies to take advantage of a recent FCC Part 15.247 rule change allowing wider than 1-MHz hopping channels when using frequency-hopping spread spectrum (FHSS). WaveBolt uses a 2-MHz hopping channel to achieve 900- plus kbps.

Apparently, WaveBolt incorporates a fair amount of overhead, such as forward error correction [it’s far more common to use a 1-MHz hopping channel to achieve 2 Mbps (2 bits/Hz); WaveBolt’s bits/Hz ratio is about 0.5]. Such robust modulation allows better (apparent) receive sensitivity and range, as well as improved near- line-of-sight coverage.

Much has been made about the need for low-cost, customer- installable CPE that operates in the license-exempt spectrum. Cir- ronet is one of the first to offer such a system. Cirronet’s WaveBolt should be seriously considered by any ISP planning to provide Inter- net access over wireless, which is almost every ISP.

Wireless ISP of the Month

A new wireless system being developed by AT&T, called Project Angel, has evolved into revenue service as AT&T Fixed Wireless Services (FWS), operating in a number of U.S. cities, including Dallas/ Fort Worth and Anchorage.

FWS allows AT&T to operate as a CLEC and do so without the use of unprofitably priced ILEC telephone lines. Its markets are among the few that actually do offer a choice of local telephone ser- vice, and, by all accounts, it is being well received by customers. The service offers up to four lines of telephone service and “burst to 1 Mbps/best effort” Internet access.

Microsoft, the third partner of the powerful venture team, markets StarBand service under the MSN umbrella, buying access and equip- ment from StarBand on a wholesale basis. Microsoft’s relationship with RadioShack allows StarBand access to over 8000 retail locations nation- wide. Microsoft put a reported $60 million into the company for a 26 per- cent equity stake.

NOTE While StarBand is currently focused on the residential market, it does have plans to target SOHO and small business users beginning in the first quarter of 2003.