Independent telcos with CLEC arms are some of the earliest WiMAX adopters -- the reason has more to do with regulations than technology

As telecom industry stakeholders eagerly monitor Sprint’s ongoing broadband wireless deployment efforts based on WiMAX, the technology already is finding a niche with Independent telcos that have CLEC operations and that view the technology as a hedge against regulatory uncertainty.

Independents such as Chibardun Telephone Cooperative and TDS Telecom that operate as CLECs outside their traditional territory have had strong results in those markets, often by bringing advanced telecom services to neighboring communities that were underserved by incumbents. But today many of these Independents-turned-CLECs see that success in jeopardy.

TDS, a regional telco headquartered in Madison, Wis., offers DSL as a CLEC in several areas where it relies on copper loops leased from incumbents. But as those incumbents bring fiber deeper into the network, it may prevent companies such as TDS from getting the copper loops they need.

And as Scott Meier, WiMAX product manager for TDS, said, “The regulatory environment is always changing what we pay for copper loops.”

Chibardun, based in rural Wisconsin, operates as CTC Telecom in several neighboring communities outside its home territory. The company is less reliant on ILEC facilities, as its initial CLEC operations were based on building its own fiber-to-the-home (FTTH) networks, but Chibardun/CTC sees regulatory uncertainty on a different front.

“We’re unsure about what the regulatory changes will be for Universal Service funding,” said Rick Vergin, CEO of Chibardun and CTC. “That makes investing a tremendous amount of money in wired plant pretty risky now.”

Because WiMAX requires a relatively low investment, companies such as Chibardun/CTC and TDS are finding the wireless technology to be a good solution for serving neighboring communities while giving them complete control over their network facilities.

TDS acquired spectrum in the 2.5 GHz band in Madison in 2005. “We purchased it with the intention of doing WiMAX,” Meier said.

TDS is the incumbent on the west side of Madison and a CLEC in the central and eastern part of town, where AT&T is the incumbent. TDS has offered DSL throughout town at speeds ranging up to 4 Mb/s downstream and 1 Mb/s upstream. On the CLEC side of the business, that offering has relied, in part, on AT&T facilities. A key motivation for deploying WiMAX was to reduce that reliance. “Our primary goal was to show we can survive as a CLEC to deliver our own network and services,” Meier said.

Using equipment from Alvarion, TDS now delivers WiMAX from eight towers in its CLEC territory. Each tower covers a radius of about two miles. Meier said TDS invested “a couple of million dollars” in the deployment.

The company uses the infrastructure to deliver data service at speeds up to 6 Mb/s downstream and 3 Mb/s upstream, which it claims is the highest broadband speed in the market, where both AT&T DSL service and Comcast cable modem service is available. The TDS WiMAX network also supports voice service based on voice over IP (VoIP), and the company’s price structure encourages customers to purchase both voice and data services.

WiMAX monthly rates range from $50 for 2 Mb/s data service and unlimited voice to $60 for the same package with 6 Mb/s data service. Customers would pay about $5 less per month for any of the data services without voice. All prices are identical to what TDS charges for DSL service at equivalent data rates, although that service tops out at 4 Mb/s.

“The response from the market has been incredible. We’re definitely dealing with a backlog of orders,” Meier said. He added that the majority of customers purchase a bundled offering and that CLEC customers seeking data services today are steered toward the WiMAX-based offering.

To support VoIP, TDS invested in an IP gateway from Genband. Meier referred to the offering as VoIP-over-transport. “We started out with the same switch we use for [basic service] and using our TDM network,” he said. “The IP gateway converts the voice signal into packets, which are then put over WiMAX. When it arrives at the customer, it’s in packet form, and we use a terminal adapter to convert the signal back into analog.”

While declining to provide details, Meier said the IP gateway also is being used to develop services — not necessarily based on WiMAX — that could be rolled out to business customers. “We have been using the gateway for multiple product development initiatives,” Meier said. “It was a learning experience on many different levels.”

Meier anticipated that TDS will offer mobile WiMAX service whenever the technology becomes available to support it. The company also is evaluating opportunities to expand WiMAX to other markets.

Meanwhile, CTC Telecom’s broadband wireless deployment is in the lower 700 MHz band, where the company won spectrum in a 2002 auction. To date, the company has deployed five towers.

The first three towers used a proprietary solution from Airspan, but the two towers installed since 2005 use equipment from Soma Networks, which Vergin called a “pre-standard WiMAX” solution. According to Soma, its 700 MHz offering can easily be updated to WiMAX standards once they are finalized.

Each of CTC’s towers serves a different community. In the areas served with the Soma equipment, CTC offers data and VoIP-based voice service, while in the Airspan communities the carrier offers only data. CTC’s data service provides up to 1.5 Mb/s downstream and 256 kb/s upstream in all five communities, where CenturyTel is the incumbent.

“Our pricing compares very favorably,” Vergin said. The company charges $39.95 for 512 kb/s service and $44.95 for 1.5 Mb/s service. Where voice service is available, it costs just five dollars more a month for unlimited calling.

While declining to provide take rates, Vergin said the company is on track to meet its business plan, which calls for recouping the company’s half-million dollar investment in three years. “About a third of customers go for bundled VoIP/broadband packages,” Vergin added.

CTC’s VoIP deployment essentially replicates basic service and does not include VoIP-based bells and whistles such as find-me/follow-me service. “Most customers are interested in plain old phone service,” Vergin said.

For CTC, as for TDS, experience gained with VoIP in its WiMAX deployment is expected to benefit other parts of the business. “We knew we wanted to be in VoIP, and this was a good place for us to learn about the technology and what’s needed to do it,” Vergin said. He added that the company delivers VoIP from a Versatel Networks softswitch.

Regarding the company’s FTTH deployments, Vergin said, “We got VoIP to operate first on our wired system, where it was much easier to control and deal with. After we got the wired business working properly, then we migrated it to wireless.” Eventually the company anticipates migrating to VoIP for its ILEC business, but that move would require additional switch investment, he said.

Like TDS, CTC does a truck roll for every WiMAX installation. “For most customers, this is their first experience with us,” Vergin said. “We hand-hold them more than we would if they were familiar with our service.”

Also like TDS, CTC wants to eventually support mobile broadband data services using WiMAX. Vergin hopes the winners of the current auction in the upper 700 MHz band will drive development initiatives whose coattails CTC can ride.

CTC also owns spectrum in the AWS band, and it plans to use that spectrum to deploy UMTS technology to support mobile broadband operation.