Competitive Pressures

We identify and focus on four apsects of the current and evolving ISP and TSP market:

• Flat Rate Pricing models
• Custom services.
• Bandwidth
• Cost and Revenues

Competition and Flat Rate Services

In the increasingly competitive world of ISPs, the dominant volume players are seeking to use their power to provide FLAT RATE access. Flat Rate access has the following characteristics:

• It uses a conventional inbound access model.
• User access demand increases though service usage does not change significantly.
• Longer connect times (connect and leave connected overnight).
• Access capacity has to be increased (lines, access equipment)

Big Players use Flat Rate pricing for four reasons:

• Laws of averaging - not all users exhibit the same characteristics, the larger the sample (more users) the more "normal" the service access.
• Larger pools of resources (lines, access equipment) allowing averaging effects.
• Larger financial muscle to quickly add resources.
• Volume advantages do not apply to smaller players.

In an increasingly competitive world, to compete means finding solutions that negate the advantages of the big players and maximize the advantages of the smaller players.

Flat Rate Access with HotPools™ and PVA

HotPools and PVA invert and negate Flat Rate competitive advantages through the use of innovative technology:

• With HotPools long connect times DO NOT EXIST, links are automatically broken when there is no traffic.
• With HotPools™ resources may be added on an incremental basis. Management utilities monitor channel loading and may be used to guide addition of capacity to the pools precisely as required.
• Capital and operational costs are lowered between 75 and 50% using HotPools™ technology. Allowing both price competition and increased profitability.

Custom Services

The service access model has remained static for a long time. It is our contention that this is driven by lack of available technological choices.

New and innovative services may be developed under HotPools that give commercial (and residential or SoHo) users precisely targeted packages that provide valuable advantages without incurring cost overheads e.g. instant e-mail (or outbound "push" e-mail) may provide many users with better service than conventional inbound access while incurring lower costs than conventional 'polled' e-mail access.

HotPools offers the following elements from which custom services can be constructed:

• Bi-Directional (Inbound and Outbound) access
• Dynamic management of resource usage based on need, time or budget
• Smooth incremental cost and bandwidth growth
• Sophisticated QoS management to deliver precise traffic loading

Examples of custom services could include the following:

• Instant e-mail (e-mail to your desktop as it arrives) uses outbound access model
• Internet Voice services (call any time) Outbound service model
• Low volume or time of day Internet Access, Web sites or FTP servers
• Support for Internet "Push" services

Bandwidth Considerations

As we move into an era of ubiquitous high-bandwidth access the most pervasive technolgies (cable and xDSL) are owned by the dominant network operators. The classic laws of volume and market access apply. The smaller and mid-sized operators who do not 'own' networks will be increasingly locked out. HotPools enables current techlogies to be maximised but what of the future. It is our contention that in order to level the playing field all ISP must 'own' network resources and the only viable solution to this problem is Wireless acess.

Wireless has the following advantages in this context:

• It is relatively cheap on a bandwidth basis
• It is relatively easy to install and operate
• It has very low operating costs
• No restrictions on usage

Modern wireless systems have the following characteristics:

• License-free bandwith in the 2.4GHz and 5.8 GHz ISM bands
• Speeds in the range 1 to 10M and higher
• Lower speed Frequency Hopping Spread Spectrum technology provides reliable performance even in relatively crowed environments which the higher speed Direct Sequence technology CANNOT deliver.
• High customer densisty and coverage via the use of good 'cell' design
• Radio power for 'cell' ranges of 3 to 10 KM provides lower initial build-out costs

It is our contention that for survival, service operators must look toward increasing 'ownership' of network resources. It is further our contention that ISM broadband wireless is the only currently cost-effective and viable technology by which small and mid-sized providers can achieve 'ownership'.

Costs and Revenue Implications

ZyTrax Warp products using HotPools and Permanent Virtual Access (PVA) provide the following benefits to the service operator:

Impact on Costs

With HotPools™ and PVA the following measurable, bottom line benefits are delivered:

• Access equipment is added as required (wired or wireless in any combination). Costs are tied directly to service revenue.
• Incoming PVA - between 4 and 16 users can be serviced simultaneously on a single 'link' (or wireless cell).
• Capital costs are reduced between 50 to 75% over conventional architectures.
• Access costs are reduced between 50 to 75% over conventional architectures.

Impact on Revenue

The power and flexiblity of HotPools™ and PVA means that value added custom services can be created thereby increasing differentiation, revenue and profitablity. The characteristics of such new services can include:

• New services may charged based on connection time, time of day or day of week, data transmitted or received or packets transmitted or received.
• QoS services ensure that traffic is perfectly 'shaped' for the payment plan
• Users can be offered incremental access growth.
• Outbound Internet Services can be both valuable to a customer and significantly cheaper to operate.

In summary HotPools provides a toolkit to compete and win against much larger players by using sleath, cunning and guile not brute force.