One firm exits, one enters wireless broadband arena. (Up Front).

One local broadband startup has closed up shop and another, with what its executives swear is a can't-miss business plan to provide customers with wireless service, has taken its place. It's all part of an off-and-on, but growing, trend to offer fiber-free broadband service throughout the country.

"People tell me I'm crazy, but that's something you hear a lot these days when it comes to startups," said SkyPipeline Inc. CEO Ryan Blair.

Camarillo-based SkyPipeline is the latest in a string of wireless broadband service providers that are trying to take root in major cities around the U.S. According to the trade group Wireless Broadband Alliance, there were 2,073 markets served by wireless providers in 2001, up from 723 markets in 2000.

Some of the biggest wireless broadband firms to surface so far are Prairie Inet Inc., serving 150 markets in the Midwest; Xtratyme Inc., 105 markets in Minnesota and Iowa; and DTN Speed.Net Inc., 54 in the Midwest and Southwest. But many markets, the group said, are served by a single startup, and plenty of them are struggling.

Just last month, wireless broadband startup Broadband Highway Inc. of Woodland Hills closed for good amid a mountain of debt and a scant few subscribers. Like SkyPipeline, Broadband Highway had a wireless way to offer broadband service - through its network of lasers mounted atop high rises in the San Fernando Valley.

That venture failed when the company was unable to find enough takers for its ambitious broadband plans, Blair said.

"They just ran out of money when they couldn't find enough customers," said Blair, who made a deal with Broadband Highway to pick up many of its customers.

Former officials with Broadband Highway did not return telephone calls to the Business Journal.

Experts say Broadband Highway was hamstrung by a technology that was deemed inefficient at best. John Ellis, director of broadband products for Earthlink Inc., said lasers can be impacted by fog and distance, making it susceptible to frequent interruption or decreased speeds.

Mistakes, Blair said, his company won't make.

"Microwave is a proven technology that's been around for 30 years that is cost-effective and efficient," he said.

After nearly nine months in business, SkyPipeline has 700 customers in the San Fernando Valley and eastern Ventura County. Blair won't say how much SkyPipeline raised in an initial round of funding completed last month but, he said, the company has enough capital to continue its expansion in the San Fernando Valley.

Robert Hoskins, editor and publisher of Wireless Broadband Exchange Magazine, said SkyPipeline would have to spend between $5 million and $10 million to reach enough customers in the Valley and Ventura County to break even.

"The place where they'll make their money is in the sale of T-1 lines (which range from 500 kilobits to 1.5 megabits per second) where they can go in and provide it for $500 a month when the phone company offers it for $1,000 a month," Hoskins said.

Samuel May, an analyst with U.S. Bancorp Piper Jaffray, said he expects to see more startups enter the wireless broadband industry as traditional broadband firms struggle with growing costs.

May said the lower costs associated with wireless and its ease of deployment make its proliferation a viable alternative to its fiber counterpart.

May's assertions are in keeping with a report issued in July by a Redwood City-based market research firm, Dell'Oro Group Inc., showing that wireless broadband revenue would grow from $1.2 billion in 2001 to $3.1 billion in 2006.

Jonathan Kramer, president of Kramer.Firm, a broadband consulting firm, said SkyPipeline could well fill a niche left by other fiber-based broadband firms.

"Microwave is more efficient than laser, so they won't have problems that come up with that, and ultimately it's cheaper than fiber," Kramer said.

By eliminating the use of a telephone company's network or by laying its own fiber-optic cables underground or atop telephone poles, SkyPipeline eliminates many of the expenses that make-high speed broadband service expensive to businesses, Kramer said.

SkyPipeline plans to target companies with Digital Subscriber Lines, or DSL, which have speeds of 200 to 600 kilobits per second, as well as those with higher-speed T-1 lines.

Offering rates that are 40 to 50 percent lower than traditional in-the-ground broadband service, SkyPipeline hopes to cash in on those firms who were priced out of the high-speed broadband market.

"Our low cost is really our selling point," Blair said. "We're basically looking for companies that are looking to save money on their broadband service or that want an alternative to fiber."

Already the company has erected a number of microwave towers.