Broadband Service Aims at Folks Who Hate Their Cable Company

Starry Is Taking on Entrenched Players Like Comcast and Time Warner Cable

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Chet Kanojia is a man who likes to buzz in the ears of the biggest, most entrenched players he can find. On Wednesday, the founder of the failed internet television service Aereolaunched Starry—a company that aims to replace the wired broadcast access sold by cable and phone companies like Time Warner Cable and Verizon with a new type of wireless network.

Starry will sell $350 Wi-Fi routers—Starry Stations—that will allow gigabit speeds. That's far faster than most wired connections. Starry plans to launch in Boston this summer, and the company will announce other markets later this year. It has asked the FCC to let it test the service in 15 cities. Unlike most wireless plans—and some home broadband plans—Starry won't put caps on data usage or throttle heavy users.

Kanojia hasn't worked out pricing yet. But he said the startup will have to spend about $25 to connect to each home, or about 1% of what he estimates it costs to install wired Internet service. When asked whether the service would cost less than $70 per month, Kanojia smiled and flashed a double thumbs- up. "That's the whole point of this," he said.

The technology behind Starry is a mouthful: millimeter wave band active phased array technology. In semi-layman's terms, this is a type of airwave not currently used for communications. The plan relies on building equipment that will tap into these airwaves.

There's probably a market for cheaper internet access among cord-cutters who want to stop writing checks to the cable and phone companies. According to a recent survey by the Pew Research Center, over 40% of people who've discontinued their cable subscriptions don't have home broadband, either. Most told Pew they simply couldn't afford it.

This idea of replacing cables with wireless networks isn't new. As far back as the 1990s, AT&T thought it could provide telephone and video service to millions of Americans by building what's known as a fixed wireless network. Its ambitious Project Angel failed and led to a $1.3 billion write-down.

More recently, telecoms seeking merger approval have proposed building fixed wireless networks as a way to bring the web to remote—and unprofitable—rural customers, an idea the Federal Communications Commission has deemed unpersuasive. Big U.S. phone companies are still working to build these rural networks, funded by a federal program to improve coverage in underserved areas.

About 165 million people had access to fixed wireless internet as of September 2014, according to Broadbandnow.com, which analyzes government broadband data. But it's slow and expensive, and likely to be impacted by weather or interference from buildings. As a result it's seen primarily as an alternative for people in rural areas who have to rely on other bad options, like satellite Internet or dial-up connections.

Starry, by contrast, is targeting urbanites. In Boston, it plans to put a series of base stations on the tops of buildings (Kanojia didn't say how many), each with a range of 2 kilometers (1.2 miles), and the ability to transmit signals to many different receivers in people's homes. Eventually, Starry will have to obtain spectrum licenses from the FCC to operate its network. For smaller cellular carriers, finding the capital to win auctions for such licenses have made it hard to compete with AT&T and Verizon. But Kanojia argues that the spectrum he'll need is so underused that there's more than enough for everyone.

Millimeter-wave communications systems have been around for a while, but have mostly been used for so-called point-to-point communication, where a signal is focused into a laser-like beam to be picked up by one receiver. It's much harder to send a signal that fans out to many receivers, and the technology to do so is only just now becoming financially viable, says Scott Barker, an engineering professor at the University of Virginia. Among the companies that have been at the forefront of such innovation is Raytheon, where several Starry employees have worked.

There are a number of big technical questions, mostly related to how far the signals can travel, and how many devices can connect to each base station. While cellular signals travel fairly easily through building walls millimeter wave signals often bounce off such surfaces. "In places like New York City and Boston, where you have a lot of high rises and stuff going on, that's definitely going to be an issue," said Barker.

In addition to the novel network, Starry is leaning heavily on the design of the Starry Stations, which are simple white triangles with touchscreens that present such useful information as how well the internet is working and what the Wi-Fi password is.

Needless to say, optimism was plentiful at Starry's Manhattan launch event. Left mostly unsaid was what happened the last time Kanojia came up with a clever technical plan to provoke some fundamental change in American telecommunications. Almost everyone at Starry came from Aereo, a novel Internet television product that a federal judge derided as a "Rube Goldberg-like contrivance." The Supreme Court eventually decided the company's business model was a copyright violation.

That defeat has to be fresh in the minds of Starry employees. But Kanojia says that if his latest company fails it likely won't be because of a lawsuit. They've got more pressing challenges with following through on the technology itself.

"When you start a company, the focus is, what asymmetrical advantage do you have?" he said. "Last time it was a regulatory advantage we were developing. This time it's purely a technological advantage. I don't see a legal problem, but I don't want to shortchange it. This is a huge execution problem."

-- Bloomberg News

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