A towering example of successful broadband resale

Towerstream's rooftop-based wireless broadband model has merit, says Tom Yager

Internet tiering, the practice of assigning smaller subscribers reduced qualities of service, bugs the hell out of me. It’s a move to reapportion bandwidth in oversold markets without lowering the price of service for those whose quality is reduced. Why, some wonder, can’t we work around this? Entrepreneurs could buy enough telco bandwidth to qualify for top tier status, then chop up that bandwidth and resell it with the governors removed. The catch is that bandwidth resellers are stuck using the copper and fibre networks owned by the telcos against which they compete. They have to place their equipment in telcos’ central offices in order to distribute their services. When tiering kicks in, telcos can stick bandwidth resellers, and therefore their subscribers, into whatever tier they like, based on criteria fabricated by telcos.

There is a way around this scam, or rather, above it. Towerstream is succeeding where a lot of would-be wireless internet players have failed. It supplies scalable internet connectivity to businesses in metropolitan areas through a web of WiMax transceivers.

It works like this: Towerstream leases small plots of space on the rooftops of office buildings. When Towerstream wins a spot on a roof, many of the buildings have telephony facilities and hosting providers on or near the top floors. Towerstream grabs a gigabit link from each of them, and through the magic of the WiMax mesh, adds to its total available bandwidth and eliminates the risk that subscribers face when they buy their bandwidth from a single carrier.

This isn’t a tale of a telecommunications Robin Hood. At US$500 (NZ$676) per month, its lowest-tier T-1 service (1.5 Mbit/s upstream and downstream) hovers around or slightly above average pricing for markets it serves. However, Towerstream gives its customers three extras that can make its service priceless. First, its T-1 includes DSL-like 3 Mbit/s “best effort” service; you get up to twice as much bandwidth when the network’s not crowded. Towerstream offers a service level agreement (SLA) that’s incomparably sweet for smaller subscribers: 99.99% guaranteed availability, a maximum of 75 milliseconds round trip to the backbone and a maximum of 1% packet loss. And lastly, Towerstream’s network assigns high QoS (quality of service) priority to VoIP traffic, so it’s practical for a business to use Towerstream’s WiMax internet service to offset its wired telephony costs.

Did I say three extras? I missed the one that’s the point of the whole story. You might recall that Towerstream buys its bandwidth in multiples of a gigabit, which puts it in the top tier in even the craftiest telco’s book. Towerstream chops up that bandwidth and resells it, but there’s no copper, no fibre and no telco-owned infrastructure in the picture. Unless Towerstream loosens the 75 millisecond round trip delay and 1% packet loss provisions, it’s promising that even its bottom end, T-1 customers won’t be tiered.

Neither wired nor wireless bandwidth can be free because the infrastructure costs too much to build and maintain, but Towerstream shows telcos for the carpetbaggers they are and presents a model for escaping their clutches. It’s not perfect: only residents of metro areas including New York, Chicago, Boston and San Francisco are reached by Towerstream, and Towerstream has no plans to reach out to or beyond the ‘burbs. But Towerstream shows would-be WiMax players aiming for smaller markets how it could be done. Telcos, the future of the internet is way over your head.

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