ISPs pull out of wireless access provision

More than forty local ISPs have dropped out of the wireless access game according to a new report by researcher Market Clarity.

The report, which quizzed 512 internet service providers, found that during 2004 and 2005, the number of ISPs offering wireless plans rose strongly, peaking at close to 140.

However, in February 2006, this number had fallen to less than 100 providers.

Market Clarity CEO Shara Evans said in a statement that this shift was linked to the business model being used by the wireless ISPs.

“Most ISPs run a business model based on a wide variety of access technologies, such as dial-up, ADSL, and ISDN in addition to wireless,” she said. “Where wireless access was not the ISP’s main source of connectivity, ISPs seemed more likely to discontinue wireless plans if they didn’t see sufficient take-up.”

Despite the drop in wireless services, the technology ranks fourth in ISP deployment behind dial-up, DSL, and ISDN, according to Evans.

This indicated that fixed wireless broadband has embedded itself as a mainstream Internet access technology.

“Wireless access remains strong wherever distance puts a limit on the DSL footprint,” she said. “This, combined with the impact of the Federal Government’s Broadband Connect program, means that there are now 70 ISPs offering wireless plans in rural and regional Australia, compared to 38 in metropolitan areas.”

The report also found that the long-term viability of wireless services, which have a lower penetration on a per-provider basis than DSL technologies, was under question, Evans said.

“The DSL segment of the broadband market has an average of more than 8,000 subscribers per provider while wireless services today have around 890 subscribers per provider,” she said.

“While this is not a problem for ISPs who have their infrastructure costs spread across a large subscriber base using many different technologies, it presents a challenge for ISPs for which wireless is the main game.”