A long-awaited change in European rules on spectrum licensing now offers the opportunity to provide telecommunications services over radio networks without costly licences or inflexible resale arrangements.
De-regulation of radio spectrum in both 2.4 GHz and 5 GHz frequency bands means that commercial services may be provided in these frequencies without any formal licence application. However, limitations are imposed in most countries on power emissions and permitted signal reach, making these frequencies ideal for Wireless Local Access Networks (‘WLANs’) and not much else. Take up projections indicate around 115,000 ‘hotspots’ (61 % in the US, 26 % in Europe and 13 % in Asia) and 17,000,000 subscribers by the end of 2006.
WLAN and WISP
Wireless Internet Service Providers (‘WISPs’) are Internet Service Providers which use WLANs to retail Internet access to end-users. WLANs are based on short-range radio technology designed to connect enabled electronic consumer devices such as computers to the Public Switch Telephone Network (‘PSTN’) or public Internet, wirelessly and without the use of a mobile phone. The WLAN’s reach is a limited area (known as a ‘hotspot’) within 50-150 metres of a radio beacon, but despite low power appearances, this is capable of offering Internet access at speeds of up to 11 megabits per second (“Mbps”).
A WISP may be:
- an existing ISP or portal provider which has entered into an access relationship with hotspot facilities managers to serve fixed access account holders when they are on the move;
- a GSM network operator offering cheap, limited, wireless services to customers as an alternative to using their GSM or 3G phones; or
- the owner or manager of a retail outlet offering a complementary service to transiting customers for other services.
Unlike WAP, GPRS, UMTS and handheld devices, WLANs do not depend on the availability of bespoke content. The bandwidth available on WLAN technology makes standard World Wide Web pages easily accessible. Connection via a laptop computer allows the user to view the Internet using the screen for which the web was designed. This means that WISPs which are able to sign up customers, are not held back by the lack of desirable content which continues to hold back other broadband technology markets.
Below the WISP in the service chain sits the company with the business development ideas to assist WISPs in planning, launching and operating their services, so-called WISP Enablers. WISP Enablers range from the largest players within the data communication sector, such as IBM, to smaller and more specialised companies such as Åkerströms Nowire in Sweden and Excilian in Luxembourg. Below them sits the technology provider which enables the PC, companies such as Airwave, Global Digital Media, Surf and Sip and Wayport in the U.S.; Megabeam in the U.K.; Jippii Group/WNS, Radionet and Sonera in Finland; Telenor in Norway; Tenzing in Canada; Telia HomeRun in Sweden; and Wificom in France.
Reach and roaming
The most cost-effective way of expanding a network of proprietary hotspots is for WISPs to have roaming agreements with other WISP networks. The WISP with whom the end-user has a client relationship is generally referred to as the ‘Home WISP’, while the WISP that allows the Home WISP’s clients access to its own network generally is referred to as the ‘Visited WISP’. Roaming is a bigger challenge in the WISP market than in the GSM market since it involves a larger number of small players.
In April 2002, the WISP driven and vendor supported association Pass-One was established. Pass-One (www.pass-one.com) is a co-ordinating central legal entity for the WISP market. The overall aim of Pass-One is to establish a multilateral roaming agreement and thereby provide users of WLAN devices with the possibility to roam, not only the network of the WISP they subscribe to, but also the networks of most other WISPs on a world-wide basis. Further, Pass-One aims at implementing a global service mark that will certify minimum service standards and through them, compliance of its members’ networks. The Pass-One global service mark is intended to be a recognition tool for end-users.
Standards bodies are producing ever faster radio standards. In November 1999, the organisation behind the Ethernet standard, the Institute of Electrical & Electronic Engineers (“IEEE”), ratified the wireless equivalent 802.11b, which delivers speeds up to 11 Mbps to users located within a hotspot, as a standard.
In mid-September 2002 IEEE announced that the organisation had developed a new draft standard for WLAN, 802.11g, which uses the same frequency as 802.11b but the theoretical bandwidth is increasing to 54 Mbps. However, standardised products using the new standard will not appear on the market before the third quarter of 2003.
In 2001, the non-profit organization Wireless Ethernet Compatibility Alliance (now known as the ‘Wi-Fi Alliance’ see http://www.weca.net/OpenSection/index.asp) developed a hardware standard generally referred to as Wireless Fidelity (“Wi-Fi”). The Wi-Fi Alliance certifies the interoperability of hardware and promotes Wi-Fi as the global WLAN standard. Products which meet the specifications are marked with the Wi-Fi logotype, a symbol which ensures consumers that the marked products are interoperable even though they originate from different manufacturers.
Relationship with 3G mobile
Although 3G licensees are quick to differentiate WLANs as complementary but inferior to genuine broadband mobile networks, it is no secret that WLANs have a number of advantages to 3G, most obviously the speed of data transmissions - 3G offers a realistic speed of 383kbs in contrast to its theoretical speed of 2 Mbps. Another advantage with WLANs is the cheap technology. The cost for a commercial base station is $500 - $1000 USD, a home base station costing only $150 - $200 USD and a PC network card costing around $100 US dollars. With such modest upfront investment, even individuals may install WLANs at home.
However, even though WISP services will offer users a cheaper and faster data service within hotspots, 3G or GPRS have different strengths. Although the average radius of UMTS radio cells is around 547 yards at a data transmission rate of 384 kbit/s and about 984 yards for voice transmission, the UMTS network technology permits break-out from one cell to another at car driving speed. WLANs offer virtually no mobility. The solution is interoperability between WLAN and UMTS technology, so that end-users can get high speed downloads when stationary, but continuous access when moving. This technology is in development. Another distinction is adaptability for location-based services. A UMTS network 'knows' the location of handsets, and consequently through UMTS a provider can provide location-based services. W-LAN's do not 'know' the location of connected handsets and therefore such services cannot be provided easily.
For market entry purposes, the key differentiator between 3G networks and WLANs is that resource-intensive licenses are increasingly not required for WLAN technology in the 2.4 and 5GHz ranges.
In July, the UK regulatory authorities removed prohibitions on commercial use of WLAN technology where the following conditions are met:
- Use: the apparatus is established, installed or used to provide or to be capable of providing a wireless telephony link between a telecommunication system or telecommunication apparatus, and a public switched telephone network, where a telecommunication service is provided by way of business to another person;
- Frequency: frequency band 2400.0 to 2483.5 – consultation is ongoing on extending this to 5GHz, and a liberalising decision is expected by November 2002;
- Apparatus: to be used in line with the specifications set out in Schedules 3 to 7 of the legislation:
- Network User stations;
- Cordless Telephone apparatus;
- Land Mobile Satellite Service Stations;
- Short Range Devices; or
- PMR 446.
- Compliance: the apparatus must comply with UK Radio Interface Requirement 2005 for wideband transmission systems operating in the 2.4 GHz ISM Band and using spread spectrum modulation techniques, published by the Radiocommunications Agency of the Department of Trade & Industry in March 2000.
In France, the ART has launched an action plan for liberalising WLAN use. On December 12th 2001, a public consultation was launched, followed on April 4th 2002, by a summary of contributions in response to the consultation. On June 11th 2002, ART published a press release on its action plan. This plan aims at changing the conditions of use in the 2.4 GHz and 5 GHz frequency bands in order to allow commercial telecommunications services by the end of this year. The agreement between the Ministry of Defence—which is the past and current user of the band—and ART states that the 2400-2483.5 MHz frequency band will be made available for equipment with an effective isotropic radiated power of 100 mW inside buildings and 10 mW outside buildings beginning 1 January 2004.
ART has also presented to a consultation committee (Commission Consultative des Radiocommunications) six draft decisions opening the way for Internet fast access for end users in hot spots. ART will then notify these draft decisions to the European Commission in order to allow other Member States and the Commission to raise concerns about potential barriers to trade. The decisions will then need to be approved by the Ministry of Telecommunications. This summer, the ART published guidelines defining the conditions under which temporary networks can be established, in particular in the 2.4 GHz frequency band, to trial the technology and assess its capacity for providing high speed Internet access in parts of the country that are currently ill served by existing networks.
The German regulator, the RegTP, has come to the conclusion that WLANs do not – as formerly considered – compete with UMTS but rather, complement it. Technical and regulatory reviews and market-analysis suggest that digitalisation and flexible transfer rates permit radio networks to substitute for fixed networks as universal access networks which can support any type of voice or data application. The same is not true of WLAN technologies, where substitutability is affected by spectrum scarcity, device compatibility, cross border reach, download speeds, data security and the level of mobility required.
Germany is therefore proposing to liberalise frequencies in the 5GHz range for new WLAN implementation in addition to 2.4 GHz frequencies which are already in use - 5 GHz is thought to offer improved service levels compared to heavily used frequencies in the 2.4 GHz range. Due to the fact that these frequencies are not considered to be scarce resources, no licence fee would be payable. Spectrum planning, interference control and market issues however, mean that these proposals are currently subject to consultation and future approval.
The Hong Kong 3G Mobile Services Licensing Information Memorandum, the “bible” for bidders in the 3G auction, included a single paragraph on how the Government proposes to treat W-LANs. It stated the Government’s intention in the future to license the provision of public mobile services using low powered W-LAN technologies operating in shared frequency bands. Several W-LANs already offer public services in Hong Kong, for example at Hong Kong International Airport and in some coffee shops. Many more are planned, with Netvigator, the dominant local operator’s ISP, aggressively rolling out and promoting new commercial hotspots. So long as approved low powered devices are used, such W-LANs do not currently require telecommunications licences (so no spectrum utilisation fees are payable). OFTA is likely to consider licensing the spectrum used by W-LAN technologies if either poor quality of service and/or substantial commercial exploitation of “free” spectrum become serious issues.
In the Netherlands the new National Frequency Plan, adopted in June 2002, creates opportunities to use spectrum for WLAN technology, both indoors and outdoors. Under the new regime the whole 2,400 - 2,4835 GHz frequency band is available. The new plan also makes available spectrum in the 5 GHz band, namely 5,150 - 5,350 and 5,470 - 5,725 GHz. No license is required, provided that prescribed interference controls are respected.
Under the Swedish National Post and Telecom Agency's Codes of Statutes, the 2400-2483,5 MHz frequency band is exempted from the requirement to have a licence provided that the equipment does not exceed a maximum radiated power (e.i.p.r.) of 25 mega watts.
In June 2002, the 5 GHz frequency was also exempted from the license obligation as long as it does not exceed a maximum radiated power of 200 mega watts for the frequency band 5150-5350. Radio equipment used within this frequency band may only be used indoors. As regards frequency band 5470-5725 the maximum radiated power may not exceed 1 mega watt. Other technical restrictions apply, consistent with ETSI specifications.
Drawbacks of WLANs
As with all new technology, there are risks. Unregulated spectrum is available to all and there is no-one to complain to if interference from other users is disruptive. The rules which restrict power emissions and distance keep the pollution within the deregulated band so third parties are unaffected, but there are no guarantees of how useful unlicensed spectrum is for fee paying services. For the same reasons, WLANs have limited potential for voice applications.
There are already casualties. During 2000 and 2001 the US WISP MobileStar installed hundreds of hotspots in cafés, hotels, lounges and airports all over the United States. More or less simultaneously, around 550 hotspots were installed in Starbucks coffee shops. Under its agreement with Starbucks, MobileStar should defray all expenses for the installation and operation of its WLANs and, in return, receive all revenues. This meant Starbucks made no financial investment and consequently had little incentive to promote the MobileStar service to its customers. Revenues failed to meet expectations, leading Mobilestar to file for bankruptcy in October 2001. During the bankruptcy proceedings most assets of MobileStar were bought by the US cellular carrier T-Mobile USA (formerly VoiceStream), a company owned by Deutsche Telecom.
Paradoxically, perhaps an indication of the future of WLANs, the hotspot services of MobileStar including the Starbuck hotspots, are now operated and marketed by T-Mobile USA as a complement to their GSM services.
If you would like to discuss WLANs, WISPs and radio spectrum licensing, contact:
David Kerr or Sally Trebble in London;
Frédérique Dupuis-Toubol in Paris;
Marjolein Geus in The Hague;
Jan Byok in Düsseldorf;
Richard Fawcett in Hong Kong;
Johan Tyden in Stockholm; and
Catherine Erkelens in Brussels.