XO spinoff beams broadband

XO Holdings has created a subsidiary, Nextlink, to provide wireless broadband service to government agencies and commercial customers. The company says the service could be useful to agencies seeking to ensure continuity of operations.

According to XO, wireless broadband can provide secure and reliable data transmission at speeds of 1.6 megabits/sec — the equivalent of a T1 connection — up to 622 megabits/sec.

“We can support those big pipes that government and other segments are looking for,” said John Grady, director of marketing at Nextlink.

The key appeal of wireless service is that it solves the last-mile problem, according to XO. Most broadband users do not have a direct fiber-optic connection to a backbone network. They either have to foot the bill for installing a fiber-optic connection or rely on traditional copper cabling. In a COOP implementation, the wireless broadband connection can serve as a backup to a more conventional network, Grady said. Hughes Networks, one of Nextlink’s partners, recently unveiled a similar marketing approach.

Nextlink plans to launch the service in 75 major U.S. markets in the next two years, beginning in Washington, D.C.; Dallas; Los Angeles; Miami; San Diego; and Tampa, Fla. Josh Holbrook, a senior analyst at the Yankee Group, said Nextlink can cover about 75 percent of the total market. Warren Suss, president of Suss Consulting, said Nextlink appears to be an early player in a field destined to grow. “It represents an enormously important potential, in terms of what it takes to get the prices down for federal network services,” he said.

“More and more, the biggest cost driver is the last mile,” Suss said. “When we hit the tipping point, from a technology point of view and from a security point of view and from a reliability point of view, I believe the market is going to go very strongly in this direction. This is a harbinger of things to come.”

Suss said, however, that government users are still uncomfortable using wireless solutions for their mainstream network applications. Wireless is acceptable for mobile workers and first responders, but agencies don’t want to connect their main networks wirelessly because of concerns about reliability and security, he said.

“Unless and until those barriers are overcome — those perceptions of risk —it’s going to be difficult,” Suss said.

The creation of Nextlink, a sister company to XO Communications, marks a renewal of XO Holdings’ attention to the government market, Grady said. “XO over the years has made some attempts to serve the federal market,” but that attention had waned, he added.

Now, Nextlink considers the federal market open to the company. The immediate opportunities are in the Defense Department and intelligence agencies, he said.

Other prime markets for the wireless broadband services are communications services providers and Fortune 1000 companies, he said.