Starry Not Looking for a Fight, but Broadband Vision Draws Skeptics

Xconomy Boston — 

Starry probably won’t suffer the same fate as its founders’ previous venture, Aereo, which lost a high-stakes legal battle with broadcast television titans that ended at the highest court in the land.

But in trying to change the way people access broadband Internet, Starry’s path to success is perhaps equally daunting.

The startup, based in Boston and New York, splashed onto the scene with a press event in Manhattan last week. It will start selling its first product—a sleek, high-end Wi-Fi router that also manages a variety of connected devices—on Friday. The “Starry Station” will begin shipping to customers in March, the company says.

But the more ambitious piece of Starry’s business won’t start rolling out until this summer, when the startup begins building a nationwide broadband network that it says will wirelessly deliver Internet speeds of up to 1 gigabit per second to people’s homes. It’s focusing on metropolitan areas with dense populations.

Starry’s pitch will undoubtedly appeal to a lot of people fed up with Comcast, Time Warner Cable, and other entrenched Internet providers. The company promises super-fast speeds, no data caps, no contracts, easy self-installation of equipment, and (we assume) competitive prices. (Starry has yet to announce a price for its Internet service.)

Wireless broadband technology isn’t new, of course. As The Verge reported, a group of such companies first cropped up in the late ’90s, but they fizzled out because they didn’t get the technology or business model right.

A newer wave of wireless Internet providers have opted to build their businesses methodically, but they remain niche players. San Francisco-based Webpass, for example, hasn’t taken a dime from venture capitalists in its 13-year history, and its service is now available in five cities. Another competitor, six-year-old NetBlazr, raised nearly $1 million from investors last year and is available in the Boston area.

Starry, meanwhile, appears to be trying to go bigger, faster. It isn’t disclosing how much it raised from KKR, IAC, Tiger Global, and other VCs, but the amount is “enough to matter,” founder and CEO Chet Kanojia says. (Aereo raised about $97 million.)

Starry founder and CEO Chet Kanojia

Starry founder and CEO Chet Kanojia. Photo by João-Pierre S. Ruth.

It’s way too early to tell if Starry can deliver on its promises. In talking with competitors and industry observers, the two biggest questions are whether Starry’s technology will work as well as it claims, and whether it can build out its infrastructure without burning through all of its cash.

“This is exactly what the Internet needs,” Webpass president Charles Barr says of Starry’s approach. “But there are huge logistical challenges to getting it built.”

The starting point for Starry’s Internet service is a network of base antennas placed on rooftops and towers, which hook up to an Internet signal via a fiber connection leased from providers like Lightower, Level 3 Communications, Zayo, and others. These “Starry Beam” antenna devices then transmit that signal to a network of nearby receiver antennas perched on the outside of customers’ windows. These “Starry Point” receiver devices deliver Internet to customers through an Ethernet cord or a Wi-Fi router. (Obviously, Starry wants you to buy the company’s fancy Starry Station router.)

For its antennas, Starry will use “millimeter wave active phased array technology”—essentially, directing high-frequency radio waves that Kanojia says can deliver faster speeds and “a tremendous amount of capacity.”

One of the primary differences between Starry and competitors like Webpass and NetBlazr is it will not rely on point-to-point, line-of-sight communication between its antennas. Instead, Kanojia says its transmitting antennas will be able to beam Internet signal to all of its receiving antennas within a 1.6 to 2 kilometer radius, even if those receivers are not within the line of sight of the base transmitter and the signal needs to bounce off of buildings and other obstacles to reach its destination. “This is point to multipoint, radiating power everywhere,” Kanojia says. “This is what Wi-Fi and LTE do today.”

But some in the field are skeptical. “I don’t think that’s going to work as well as they think,” says Brough Turner, NetBlazr’s co-founder and chief technology officer.

The Verge also interviewed two professors and a wireless industry consultant who expressed skepticism that Starry could send a reliable enough signal without installing more base antennas in closer proximity to the receivers outside customers’ windows.

Obviously, Kanojia is confident Starry has figured out how to make it work. “The clever part that we did is this phased array part, which allows us to manage how we steer” the Internet signal, he says.

Starry will get a chance to prove the technology works (and to fix any problems) this summer, when it starts testing it in the Boston area. If successful, Starry intends to expand to more as-yet-unannounced cities.

Barr, Webpass’s president, is less concerned with Starry’s technology and more doubtful that the startup can install its network of antennas quickly and easily. For example, it’ll take time and resources to strike deals with property owners to install the transmitter antennas, and the company will likely need to negotiate with apartment landlords and condominium associations to secure permission for tenants to install the receiver dishes outside their windows, Barr says.

Webpass’s experience illustrates how painstaking this process can be. In Boston, it has taken eight months to get the company’s antennas on top of about 10 buildings, Barr says. Across its five cities, Webpass has installed antennas on 850 buildings total. “It takes months, sometimes years, to get a landlord to agree. That’s when you have a customer inside the house, inside the building,” he says.

Some landlords sign exclusive agreements with a large cable or phone company to provide service in their buildings, in return for a cut of the revenue from tenants, Webpass says. That makes it harder for smaller companies like Barr’s to reach new customers. “Landlords are the biggest obstacle to the Internet,” he adds.

Starry will also have to make sure it can get access to prime locations to hook up to Internet providers’ fiber connection—and to lease those connections on terms that allow Starry’s business model to thrive. Those factors will govern “where they can roll their service out and how quickly,” says Mark Lowenstein, managing director of Brookline, MA-based wireless consulting and advisory firm Mobile Ecosystem.

Starry officials shrug off those potential hurdles. The company will no doubt draw on the experience its team had with Aereo, whose streaming TV service required installing antennas on the roofs of data centers. With Aereo, Kanojia and company also learned how to build out a technology city by city, as it plans to do with Starry, a spokeswoman points out.

Another possible pitfall down the road: the segment of radio spectrum that Starry is currently experimenting with might be utilized in the rollout of fifth generation (5G) mobile networks. That could be an expensive problem for Starry, considering that mobile carriers paid billions of dollars in a 2008 auction to snap up spectrum that became the building blocks of 4G LTE networks in the U.S. “I wouldn’t want to go into something in the [spectrum] band they’ve chosen if it’s going to be a fight with the FCC, Congress, AT&T, and Verizon over 5G,” says NetBlazr’s Turner. “That sounds very risky.”

Kanojia doesn’t seem worried. There’s plenty of underutilized high-frequency radio spectrum available for Starry to license, he says. He also points out that the FCC is still deciding how to regulate much of the high-frequency spectrum, and parts of it might be used for multiple purposes, including mobile networks and fixed broadband.

“I think philosophically, globally at this point, all people are looking at this idea of shared [spectrum]—how do you build systems that without interfering can operate in licensed bands or lightly licensed bands” Kanojia says. “We’re not setting up for a fight with anybody.”