A much-awaited ruling from the Federal Communications Commission, hailed as one of the most important spectrum-reform decisions during the past decade, could impact the wireless industry even more than anticipated. The FCC’s final rules on secondary markets, which ease spectrum-leasing rules for wireless-spectrum licensees, announced last week might actually advance the implementation of microwave-based mobile backhaul networks.
The opportunity for microwave backhaul in the United States holds promise for fixed-wireless companies with spectrum licenses in the 39 GHz microwave band, and it has made those companies particularly anxious for the FCC’s ruling that now allows them to effectively pursue mobile backhaul as part of a revenue-generating business plan.
The fixed-wireless model hasn’t changed, according to Emmy Johnson, an analyst at Sky Light Research, but now that the licensees can lease their spectrum, while others purchase the necessary equipment, the model is more feasible.
Point-to-point or point-to-multipoint microwave radio is one alternative for traditional wired backhaul. In fact, with a $3 billion market worldwide, microwave radio is the predominant solution for backhaul almost everywhere but the United States, according to Johnson.
Mobile backhaul offers significant savings to wireless carriers because traditionally used T1 lines are extremely expensive to install and maintain. That expense is an important consideration as third-generation technology implementations likely will require additional backhaul. Furthermore, installing more backhaul may ease social and political objections, which have become increasingly popular reactions to new cell-site buildouts.
First Avenue Networks, which functioned as Advanced Radio Telecom Corp. (ART) until it emerged from bankruptcy in late 2001, has been waiting for the FCC ruling to pursue its business plan. The company has a slew of 39 GHz licenses that it plans to use to complement existing wireless networks.
First Avenue, through its predecessor ART, and competitor Winstar L.L.C. were the primary winners in the 39 GHz FCC auction held in 2000, which garnered $411 million for the 2,173 licenses sold. Despite high hopes, both companies quickly wound up in bankruptcy.
“Companies that had it [39 GHz spectrum], deployed it according to their own vision of the market,” said Dean Johnson, president and chief executive officer of First Avenue. And because they had capital, that vision meant simply plowing ahead, deploying fixed-wireless spectrum regardless of indications there was no market demand. With the new spectrum leasing-or secondary markets-rules, the companies can now lease their spectrum to other companies, allowing the deployment of 39 GHz to play out according to market demand.
The new rules also should allow the market, rather than regulation, to decide whether a spectrum deal gets done. “Our decision unlocks value trapped for too many years in a regulatory box,” the FCC noted.
First Avenue plans to partner with equipment manufacturers and integrators to identify where spectrum is needed and to get it there. “For us to go it alone is too expensive; for them to do it alone is impossible,” said Johnson.
The company’s first priority is to use its spectrum holdings to provide additional bandwidth at cell sites for mobile backhaul facilities that can extend or replace existing backhaul facilities. First Avenue also plans to target telecom providers, wireless ISPs and the enterprise market as customers, each of which potentially could lease a portion of the company’s spectrum to enhance or build out a network.
Winstar, whose assets were bought by IDT Corp. for $42.5 million after the company went bankrupt in 2001, also appears poised to take advantage of the new spectrum-leasing rules. In response to the FCC’s original proposal for rules on secondary markets, the company in June formed a spectrum-leasing unit to focus on leasing spectrum to telecommunications and wireless service providers.
“As one of the biggest holders of commercially licensed spectrum in the nation, IDT will now be able to generate revenues from these assets,” said Brian Finkelstein, chief executive officer of IDT Solutions/Winstar, at the time.
IDT has not said exactly how, or to whom, it plans to lease its spectrum. But the end result is likely to be beneficial to the company, the service provider community and most of all, the consumer, as the commission indicated in its final ruling: “The rules we adopt will create new opportunities for licensees with under-utilized spectrum, to the benefit of consumers.”
