Broadband. It is a familiar term being tossed around the wireless industry like a hot potato, but its relatively new status is making its definition, applications and implications elusive to many.
At the most basic level, wireless broadband-also known as fixed wireless, Broadband Wireless Local Loop and Wireless Digital Subscriber Line, among other things-uses spectrum in the 2 GHz to 42 GHz frequency bands, and is a network access alternative for the delivery of data, Internet, voice, video and multimedia applications to business and residential customers.
The network itself consists of a base station and/or hub, which collects all traffic to and from subscribers within a cell; customer premises equipment, which includes a transmitter, receiver and antenna housed in a compact, directional unit; and a network management system, which governs both the network components and services being delivered.
Wireless broadband refers to Local Multipoint Distribution Service-operating in the 28 GHz and 31 GHz bands-and Multichannel Multipoint Distribution Service-operating in the 2.5 GHz band. Other frequencies also in use are the 24 GHz, 26 GHz, 38 GHz and 39 GHz bands. Generally speaking, frequencies above 10 GHz are known as LMDS. Unlicensed spectrum also exists in the 2.4 GHz and 5.8 GHz bands. Until 1993, all this spectrum went largely untapped because the technology did not yet exist to carry traffic efficiently over these frequencies.
Wireless broadband first was conceived to allow video and voice service to be transmitted at high megabit rates. However, in September 1998, the Federal Communications Commission authorized MMDS for two-way services, paving the way for Internet service, which was rapidly gaining popularity and access in virtually every home and office in the country. Industry mentality became much more data-centric, and the direction of broadband’s applications soon changed.
“Even from the business side, it’s definitely the Internet and the rich multimedia content that has come to drive broadband. Where it just used to be people browsing, the range of services that can now be offered over IP services is phenomenal,” said Andy Fuertes, senior analyst with Allied Business Intelligence in Oyster Bay, N.Y.
Wireless broadband applications are abundant, but for the network to function effectively there must be a clear line of sight between the base station and the customers’ antenna. Trees, buildings and hills will interfere with signal transmission, so many wireless broadband antennas are located on very tall buildings in urban areas. A single hub in these areas also serves the largest amount of people, making the network more efficient.
LMDS has the most limited radial range at 1 to 3 miles, but it also can carry more data-up to 155 Megabits per second-than MMDS, which has a range of 25 to 30 miles, according to “U.S. Wireless Broadband: LMDS, MMDS and Unlicensed Spectrum,” a report from The Strategis Group, Washington, D.C. Unlicensed spectrum in the 2.4 GHz band has a range of 5 to 15 miles, and frequencies in the 5.8 GHz band reach 4 to 8 miles.
Once a link has been established, the only thing that can interrupt the service is an intense storm.
Despite high expectations for metropolitan networks, many of the wireless broadband launches have been in rural markets, and until recently, LMDS was a rural phenomenon, said The Strategis Group report. Although MMDS has a greater radial range than any other wireless broadband service, it surprisingly has been deployed primarily in metropolitan markets.
Who has the spectrum?
In the United States the major carriers of wireless broadband spectrum include Teligent Inc., Winstar Communications Inc., Nextlink Communications Inc. and Advanced Radio Telecom.
Teligent operates in the 24 GHz band, Winstar holds 28 GHz and 38 GHz licenses, Nextlink-the only true LMDS carrier of the four-holds the most 28 GHz licenses in the United States, and ART operates a widespread network in the 39 GHz band. Sprint Corp. and MCI WorldCom Inc. have a duopoly on U.S. MMDS spectrum.
Teligent and Winstar are the market leaders, said James Mendelson, analyst with The Strategis Group, with established service in the U.S. in 40 and 60 markets, respectively, as well as various international markets.
ART operates broadband wireless networks in San Jose, Calif.; Seattle; Portland, Ore.; and Phoenix, and said it plans to expand service to 40 markets during the next three years. Nextlink in January deployed its first commercial broadband wireless services to a limited group of customers in Los Angeles and Dallas, and also will expand service to more than 20 markets by the end of the year, according to Scott Pace, manager of corporate communications for Nextlink.
“While we don’t have the specific cities, those cities will likely be the larger markets that we already have robust fiber rinks in,” Pace said.
Nextlink-another Craig McCaw creation-has been delayed in rolling out its networks due in part to lack of equipment from the vendors, and the vendors’ inability to meet carrier standards and needs, said Mendelson. In 1997, less than five vendors had the ability to produce an operating LMDS system, and few had been tested extensively. Today however, any number of vendors, including Lucent Technologies Corp., Nortel Networks and Cisco Systems Inc., can provide a working system. Pace said Nextlink has been working with Wavtrace, Ericsson Inc., SpectraPoint Wireless and Digital Microwave Corp. for its equipment.
The cost of building a receiver also is greater as the frequency increases.
“They’ll [Nextlink] admit they’re six months behind,” Mendelson said. “This area of the market also is on hold to see what Sprint and MCI are going to do. They’ve [Sprint and MCI] been pretty secretive about how they are going to use their spectrum.” MCI just announced last week it launched Internet service in Memphis, Baton Rouge, La., and Jackson, Miss. The service previously was video-only.
“When this whole thing started, there was really one technology against another. What’s happening today is there is starting to be a shift from that. Carriers are not focusing on one technology, they’re using a technology that best matches the problem,” Fuertes said.
“We use our wireless technology to complement our fiber optic copper rings. It’s an alternative to last-mile technologies,” said Todd Wolfenbarger, vice president of corporate communications for Nextlink.
Nextlink charges its customers according to the service they use, which could include wireline services as well as wireless broadband.
Foggy future
A few tricky curves lie ahead for wireless broadband. A lot of talk circulated long before there was any action, and some are still skeptical it can live up to the hype.
Analysts predict MMDS stands a very good chance of becoming a wireless solution for the SOHO or small office/home office sectors, but in a report released in February by Legg Mason Precursor Research, the firm strongly challenges that notion.
“Since fixed wireless has been underwhelming to date in the much more lucrative business market, it is highly questionable if it will be a competitive force in the foreseeable future in the much less economically viable residential market. Moreover, the scale players, AT&T [Wireless Services Inc.], MCI WorldCom and Sprint all plan to use fixed wireless as a `fill-in’ offering where they do not have either cable or DSL [Digital Subscriber Line] to offer,” said the report, titled “The Developing Residential Broadband Gap.”
Still, Merrill Lynch & Co. Inc. initiated coverage in February on 15 companies it classified as “emerging broadband providers,” noting broadband is a bullish sector and predicting a 71-percent year-over-year revenue growth to $8.4 billion.
In addition to Teligent, Winstar and Nextlink, Merrill named McLeodUSA, Adelphia Business Solutions and Covad Communications as intermediate and long-term “buy” comp
anies.
Most of the 15 companies the firm listed are fully funded for at least the next 18 months, leaving Merrill to predict that major wireless broadband issues this year will be related to sales force and back office problems.
The Strategis Group also sees prosperous times ahead for wireless broadband carriers. The firm forecasted wireless broadband revenues to grow at a 418-percent compound rate during the next five years, reaching $3.4 billion by 2003.
MMDS will account for the largest share of these revenues-48.1 percent, or $1.7 billion-and LMDS will account for 39.6 percent. Given a slow transition from data and Internet to phone service markets, The Strategis Group predicted unlicensed spectrum will earn $421.7 million by 2003.
The frenzied consolidation the telecommunications industry has experienced as of late also is moving many to ask if wireless broadband is destined to follow.
“From the service side there could be some consolidation. You can see some of these smaller companies getting gobbled up by the Nextlinks and Sprints,” said Fuertes.
But although he thinks a Winstar/ART merger would be in the companies’ best interests, Fuertes said he doesn’t see wireless broadband companies heading toward consolidation in the near future.
