Fixed WiMAX operator Towerstream is  building out a dense Wi-Fi zone in New York City, described by Bloomberg Business Week as seven square miles in Manhattan.  This is a new business model for Towerstream, which has up till now only provided fixed broadband wireless links to enterprise customers in large citiies.  For this NYC project, the firm is deploying  WiFi equipment from Ruckus Wireless, including 1,000 routers.  Its using its own Building- top to Building- top fixed wireless connections for backhaul.  That same wireless backhaul, in NYC and other densely populated cities, has proven successful for Towerstream’s point-to-multi-point connections it offers today as a nx DS1 or DS3 wireless replacement service.

While the Muni WiFi business model didn’t pan out- there was no payback to operators for the free WiFi provided- this Metro WiFi project is different.  It’s intended to be used for mobile data traffic offload from 3G and 4G networks.  Data traffic that’s offloaded to a Wi-Fi network doesn’t use local cell towers or capacity on cellular backhaul connections.  In Towerstream’s planned metro WiFi network, wireless data (from iPhones, Android phones, tablets, mobile game players, and other gadgets with built- in WiFi) would be detected by the nearest Wi-Fi antenna, then passed off to other WiFi antennas until it reached one of nine large base stations Towerstream operates around NYC, including one at the top of the Empire State Building.  From  there, the data traffic would be routed to the Internet.

The WiFi antennas are much cheaper and less obtrusive than cell towers. They’re about the size of a football, cost about $800 apiece, and sit on poles or rooftops; cell towers can run upwards of $200,000. Towerstream representatives have fanned out in Manhattan, persuading landlords and building owners to let the company install the devices on their property. The company pays $50 to $1,000 per installation per month, depending on location.

“AT&T, China Telecom, and many others are doing this kind of ‘Wi-Fi offload'” on a smaller scale, says Michael Howard, co-founder of market research firm Infonetics Research and an IEEE member who spoke at an IEEE ComSocSCV workshop on Mobile Infrastructure and Apps last year. 

Both AT&T and VZW have announced they are off-loading 3G/4G traffic to WiFi hot spots.  However, those WiFi zones aren’t as dense or extensive in coverage as what Towerstream is planning for NYC and other large cities (Chicago and SF could be next).  As such, Towerstream could become a vendor-neutral cost-effective alternative to carriers building WiFi zones for high bandwidth mobile data offload.

Bloomberg Business Week reports that there’s little doubt about consumer demand. “Last year, Towerstream conducted a three-month test of a 200-device Wi-Fi network in Manhattan. Without any promotion, the network handled 20 million Web sessions by consumers who happened to spot Towerstream when trolling for a Wi-Fi connection. That’s a fifth of the Wi-Fi traffic generated by AT&T during the same three months at its hotspots, which include most Starbucks (SBUX) and McDonald’s (MCD). Demand is expected to increase, even as cellular networks go from today’s 3G technology to 4G. While 4G is roughly four times faster than 3G, overall data traffic is projected to rise more than 30 percent per year, according to multiple studies. “If any of these estimates are even close to true, those 4G networks will be filled up almost immediately,” says Towerstream CEO Jeff Thompson.”

http://www.businessweek.com/magazine/content/11_23/b4231036687850.htm 

Smart phone and tablet users will likely also benefit from this offloading as they’ll realize a much faster rate of service from a dense, high-speed Wi-Fi network than the comparable 3G or “4G” service.  Equally important, the traffic offloaded to WiFi doesn’t count in the number of bytes/month in most 3G/4G service plans.  Therefore, mobile data subscribers can send/receive much more wireless data without hitting limits or paying overages on their 3G/4G bills.

In a statement accompanying its 1Q2011 earnings release, Towerstream CEO Jeff Thomspon said, “”We continue to achieve significant progress building what we believe is the largest and fastest Wi-Fi offload network in Manhattan.  The NYC network will be ready for customers in the second half of 2011.”  The cost of Towerstream’s Wi-Fi mobile data offload program totaled $1.2 million in the first quarter 2011.

This January, the company revealed it was getting into the Wi-Fi hotzone business with an aim of becoming a wholesale provider to operators desiring to offload heavy mobile data traffic.  Mr. Thomspon tipped off the company’s plans to enter this market in a Wimax360 post last year.  

“Most smartphones now come with built-in Wi-Fi, which is a mature and secure technology that even encompasses Quality of Service (QOS). Wi-Fi is now capable of carrying up to 200Mbps (the older Wi-Fi started at 11MB, 1 MB less than Verizon’s new LTE network, according to them.  The carriers can no longer ignore these extremely fast, inexpensive Wi-Fi networks and chip sets. Certainly, it will take some work. Similar to the network Towerstream is piloting in Manhattan, Wi-Fi networks must allow consumers to use their phones as phones (SMS, calls) and not just to access data. It requires a bit more capital to support a carrier class network that experiences very low latency and can handle QOS.  These networks must also improve in order to allow seamless connectivity and hand-off capabilties. For example, I hate when my iPad constantly prompts me to join a Wi-Fi network. This is not user-friendly.

Finally, let’s talk about the new WhiteFi announcement from the FCC. Building a city wide Wi-Fi network does take a significant amount of hotspots, but they possess far more bandwidth than 4G. In her article, CNET’s Maggie Reardon discusses the limitations of implementing femtocells to offload wireless traffic onto wired broadband connection. She quotes a Nielsen SVP, “You can only split the cell sites so far. There are physical limitations.” The introduction of new white space to carrier class Wi-Fi networks could possibly result in a seamless high-capacity network, a great alternative to which carriers could offload. WhiteFi would enable users to travel long distances on little power.  We are excited to see which hardware vendors develop gear for this initiative. We will be first in line!”

http://wimax360.com/profiles/blogs/the-fcc-helps-align-the-stars?xg_source=activity

On the heals of Towerstream’s mega WiFi hot spot in NYC, we’ve just learned that the city of Santa Clara (my hometown for last 41 years) will be offering free WiFi in the city as part of its IEEE 802.11n buildout later this year.  That mesh WiFi network uses Tropos equipment.  That will be another story for another time.