ABC waits for 38 GHz gear to drop in price, forges ahead in the 3.4 GHz band

High equipment prices for 24/38 GHz equipment is forcing at least one recent licence winner to launch its wireless Internet access service in the 3.5 GHz band as an interim measure. ABC Communications of St. Quesnel BC, which last year won the higher frequency spectrum licences (RoW, Oct. 18/99), says gear in the 38 GHz band costs about US$50,000. President Bob Allen says that’s too expensive for deployments in smaller urban and rural areas. "Sure (there’s) a 100 Mbs fast Ethernet circuit available with this, but the market is not there to pay those amortization costs," he told Report on Wireless. "We’ve done a lot of product feasibility studies on the (38 GHz gear), but the equipment prices are very high for anything other than major urban cores." The company, which purchased spectrum licences in the 3.5 GHz covering seven major tier 2 cities in the interior of BC, is the second BC-based service provider to invest in spectrum in this range in the past couple of months (see story in this issue). ABC sells wireless Internet for $89.98/month for a shared T1 service using licence-exempt 2.4 GHz equipment. Allen says the service is reasonably popular among small businesses, and for ABC, the capital costs can be paid for within a fairly short time. Using 3.5 GHz equipment results in a longer amortization period, although Allen said the model does have its advantages. "Since we’ve got guaranteed spectrum from Industry Canada, it’s a better investment model and that’s why ABC has gone out and gotten these 3.5 GHz licences in all these secondary markets, cities up to about 50,000 in population." The company is waiting for test gear from Breezecom of Israel before it can deploy any 3.5 GHz equipment. In the meantime, ABC is building its business through contracts with government and deployments in the Cornel and Williams Lake’s areas in the 2.4 GHz band. "We have about 30 or 40 government data circuits that give us good steady revenue because they pay the old T1 price unlike new customers who want to pay the new DSL/cable modem prices." Allen say he’s confident that once the 3.5 GHz equipment is ready for deployment, the economies of scale will make turning a profit that much easier. "We feel that we can recapture much of our investment in the first year with the customer and could quite possibly hold the customer for a long period of time," he says. Allen wouldn’t reveal how much it would cost to build out the network in the seven areas, except to say that the company would be spending about $1,000 to acquire each broadband customer. The telecom enterprise is also looking to attract broadband customers through its DSL resale agreement with Telus Corp. ABC buys its ports from the incumbent telco which it then resells to the public. "Of course, those ports will never be paid for, they’re on the ‘never-never’ plan as invented by the telephone companies, (but) it’s a way to get into the market," he says. "So we try to attack the market from both directions, from DSL where it’s available and from wireless where it’s not." The company is currently seeking about $500,000 in financing to secure the licences from Industry Canada. "It doesn’t get us a lot," he told RoW, "but it allows us to secure all those licences and put some business in the street and begin to build ourselves into those market areas." The 3.4 GHz to 3.7 GHz band was previously reserved for military use, and was opened up to commercial applications about six months ago. Discussions which led to the loosening of the regulations of the band began early last year when Nortel Networks Corp (then Northern Telecom Ltd) and the Department of National Defence (DND) agreed on the technical specifications for fixed wireless equipment (RoW March 29/99) to operate in that band. While interference may still cause some reception challenges for the 3.5 GHz commercial deployments, Allen doesn’t believe it will be a significant problem. He says that the limited size of Canada’s military operations in BC shouldn’t pose a significant problem for his company’s deployments.

ABC waits for 38 GHz gear to drop in price, forges ahead in the 3.4 GHz band

News | 10/02/2000 4:00 am EDT

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