News

BT faces shock competition in leased lines - from balloons

A startup company, Skylinc, has got permission to fly* a balloon with a wireless link, two miles up, anywhere in Britain. Technically, it's a "tethered aerostat" - legally, it's a terrestrial installation. It reckons it can undercut BT leased lines by a factor of a tenth.

*at Skylinc's earnest request, it's worth making it clear that "permission to fly" refers to two test sites, and not "anywhere in Britain" - not yet. Applications are in with the CAA.

Inevitably, sources inside BT are sceptical. "We know something about antenna design, and without getting a lot more information, we aren't going to be convinced that they can do this," said one engineer contacted by NewsWireless.Net.

The Skylinc balloon flies at 1.5 miles, to be precise, and "no, it doesn't fall down, planes don't fly into them, and the wind doesn't affect them," said Peter Chambers, business development manager of the company, making the announcement at the Digital Dales "Hardcore Wireless" seminar in Harrogate today.

LIBRA is "low-cost integrated broadband radio access" - but it's costly, requiring millions to put a balloon up, and link it to the ground via a strong cable plus a fibre data link. That cost, however, is spread. The wireless footprint at 28 GHz is around 50 miles in diameter, and in that area, says Chambers, he can bring 2 megabits per second leased line links to - typically - 6,500 small-to-medium businesses, who are currently being overcharged.

"In a typical service area, there are currently 6,500 SME leased line users, paying up to 10x the price of an equivalent Libra service. There would be, currently, another 48,000 SME ISDN users paying on average 2/3 times the price of a Libra service for 1/20th of the bandwidth."

Libra from Skylinc will, he says, bring full, bidirectional, 2 megabit data, with no contention, to these users - for around £350 a month. That compares with £673 for just 512Kbits over a BT leased line.

The problem facing this revolutionary new technology is pretty simple: and it's hard to say this without offending someone important - BT could, if it had to, both increase the bandwidth it offers to leased line customers, and cut the price - and not just a bit.

It's unacceptable to say this, because BT is under a charter to provide its services at prices based on the cost of providing them. It's not a secret, however, that the Kilostream and Megastream businesses have been allowed by the regulator to carry on charging on a historical basis, which isn't even slightly related to the current costs.

The problem facing BT, however, is rather more subtle.

Technically, it could cut the price of its Megastream service to match Skylinc's Libra. The trouble is, it is unlikely to face competition from 20 balloons covering the whole of the UK in one year. And legally, it can't cut its prices only in the area where there is competition. It has to cut all Megastream prices - including those in areas where there would be no balloons - or not any.

So Skylinc is reasonably optimistic that it can put its balloons in profitable, semi-urban areas, which then overlap with large areas of less-profitable, rural communities, desperate for broadband.

And as Invisible Networks has shown, a two megabit leased line can provide the equivalent of ADSL services for a community of half a dozen remote villages.