Subject: [NEXTEL-1] A Second Chance for MMDS

From: [email-masked]
Date: Tue, 07 Oct 2003 16:23:33 -0400

ol. 4, No. 5

September/October 2003

A Second Chance for MMDS

Large-Scale Deployment in the MMDS Band Has Been Hampered by Satellite
Competition, Equipment
Inadequacy and Carrier Skittishness. Will Improvements in Technology and New
Regulatory Changes Get Things
Moving Again?

By Daniel Sweeney

MMDS (Multipoint Multichannel Distribution Service) never quite hit the heights of
hype associated with LMDS, but it came
close. And there was much that seemed to justify the hype. When Sprint and
WorldCom divided up most of the major-market
MMDS spectrum among themselves back in 1999, the service certainly looked like a
comer. After all, why would players that
big spend all of that money if the potential were not there? When the two telcos
began to talk of a merger and of establishing a
single nationwide-branded service offering, then the future of MMDS appeared
assured.

The merger, of course, never happened for a number of reasons too involved to
discuss here. In its aftermath, Sprint and
WorldCom proceeded with their own deployments. Sprint had obtained a functioning
MMDS data network in Phoenix from
SpeedChoice, an independent network operator that it had acquired. Sprint
subsequently announced that it would utilize its
existing infrastructure of PCS tower sites to speed the deployment of the new
service and sharply reduce the cost of building a
nationwide footprint. The company quickly went forward with buildouts in a number
of cities, eventually covering 13 major
metropolitan areas and reaching 90,000 customers. Sprint ultimately signed up
several thousand subscribers. WorldCom’s
efforts appeared less focused and seemed more in the nature of pilot deployments,
but it too established a number of networks
in large cities and was eagerly courted by equipment vendors. Finally, Nucentrix
Broadband Networks, a Texas-based
independent with the third largest MMDS holdings in the nation, announced its own
plans to construct multitudes of networks
across its extensive territory in Texas and the Plains States.

Then, with little additional information being vouchsafed to the press, the
deployments of both Sprint and WorldCom were
capped. WorldCom’s MMDS networks were quietly shut down while those of Sprint were
simply maintained. The terse
explanation emanating from the two carriers was that they were evaluating
second-generation equipment prior to further
buildouts. However, nothing tangible ever emerged from the evaluation process, and
MMDS appeared to take its place beside
its higher frequency cousin LMDS as a largely failed service offering.

A Second Chance

Now MMDS is on the verge of a comeback. The newly approved IEEE 802.16a standard
for public broadband wireless in
the metro area, as well as the impending broadband wireless mobility standard
entitled 802.20, will provide a basis for
interoperability and low-cost, mass-produced chipsets. Prices for subscriber
terminals and base stations have already fallen
sharply from what they were at the time of the first wireless data networks.

There have been a number of successful deployments abroad using equivalent
spectrum, providing something of a template for
the United States. A sprinkling of U.S. independents holding spectrum in local
markets have succeeded in building profitable,
albeit small, businesses. Furthermore, Nextel’s attempted purchase of MCI’s MMDS
licenses for a purported $165 million
appears to demonstrate the value of the spectrum, and suggests that major RFPs for
equipment are in the offing. Finally, new
developments in the equipment itself to support portability, self-installation,
indoor mounting, quality of service and even full
mobility address most of the more serious limitations imposed upon the network
operator by the first-generation MMDS
offerings. These developments suggest the emergence of fundamentally new business
models that hopefully augur profitability in
both the short and long term.

To be sure, skeptics still abound regarding second-generation MMDS technology, and
their reservations gain added credibility
given the uncertainties regarding the pending Federal Communications Commission
(FCC) decisions on the use of such
spectrum (see sidebar, FCC Reconsiders the MDS/ITFS Band). But for all of the
money lost and hopes abandoned,
MMDS is getting something that has been denied to a number of earlier, vaunted
wireless data services that failed to fulfill
market expectations. It is getting a second chance.

Wireless Cable

The bands that have been allocated for MMDS (roughly 2500 MHz to 2700 MHz) are
burnt over territory — the scene of not
one, but two unsuccessful service offerings. As early as 1970, the FCC discussed
the use of this spectrum for terrestrial
subscription television networks in an application that would later be known as
“wireless cable.” More than 20 years following
the FCC’s initial inquiry, wireless cable became a reality. The FCC’s intent in
licensing MMDS television networks was to
provide local competition to monopoly cable operators, but the services were ill
positioned to perform such a role. Initial
MMDS equipment was strictly analog, and available spectrum would support no more
than 30 6-MHz channels as compared
with the hundreds of channels that could be carried over hybrid fiber coax.

Worse yet, the introduction of MMDS came only a year prior to the launch of the
first direct satellite broadcast services with
their superior digital transmissions, generous allocations of broadcast spectrum,
attractive programming and aggressive pricing.
Satellite services provided the real competition to cable, and they competed with
MMDS as well. The success of satellite
services was such that most MMDS operators went bankrupt before the end of the
decade.

Today, a few operators continue to provide television broadcasts over MMDS
frequencies, including, somewhat surprisingly,
BellSouth. Nonetheless, despite of the introduction of digital broadcasting
equipment for MMDS in 1999, the video service has
never proven very successful.

Yet even as MMDS television was collapsing as an industry, new uses for the
spectrum were emerging. Several independent
networks, most notably the Detroit-based SpeedChoice, initiated experimental data
services. In 1998, the FCC approved
two-way transmissions over MMDS spectrum, opening the way for high-speed broadband
services that could compete with
the emerging cable and DSL services.

Compete they did, but not successfully, and advocates of MMDS’ reemergence are at
pains to explain why.

“The first MMDS data networks faced an impossible situation,” said Patrick Leary,
chief evangelist at Alvarion, an equipment
manufacturer. “You have all of these ITFS (Instructional Television Fixed Service)
stations interleaved among the MMDS
channels, and the rules basically written to support a one-way television
broadcast network based on a 35-mile super cell. The
bureaucratic encumbrances simply did not allow the spectrum to be used optimally
for data. Fortunately, the FCC is in the
process of drawing up new rules that should make the spectrum data friendly.”

Margaret LaBrecque, WiMAX Forum president and chair, as well as marketing manager
of Intel’s broadband wireless access
business, cites other factors.

“Technology issues doomed the first networks — that and the sheer cost of the
equipment,” LaBrecque said. “The coverage
with non-line-of-sight equipment was such to exclude half the potential
subscribers, even with microcells. And the lack of
standards-based chips meant that the cost of the equipment would be prohibitive.”

Chuck Riggle, vice president of business development at NextNet Wireless, another
hardware manufacturer, has another
perspective.

“The dreaded truck roll lay behind most of the failures,” Riggle said. “The first
MMDS data operators faced approximately the
same installation costs as did the DSL service providers, and it proved their
undoing just as it did with DSL. That kind of
network simply doesn’t scale. It’s okay for a few high-value business customers,
but when you attempt mass deployments, the
sheer number of truck rolls will kill you, particularly if there’s churn. You need
equipment that supports self-installation and
indoor use, which is what we have today.”

Others cite the ad hoc nature of most first-generation MMDS data equipment, much
of which utilized modified cable modems.
Early MMDS networks suffered from the same limitations as first-generation cable
data networks, but first-generation MMDS
equipment was even less reliable. The unreliability stemmed from the mismatch
between cable standards, which are based on a
high-availability fiber-optic physical plant, and the air interface of MMDS with
its high susceptibility to fades and interference.

Extending the Mobile Network

What then is the correct approach to reviving MMDS data services? What will make
MMDS networks profitable to operate,
and how should they be positioned in relation to other broadband services?

Officials at equipment-maker IPWireless present perhaps the boldest vision. The
company makes both 3G and broadband
wireless equipment and is a leading advocate of mobility in MMDS.

“MMDS and related broadband wireless services in the lower microwave region alone
offer the potential for truly pervasive
connectivity,” said Jon Hambidge, IPWireless’ senior director. “One network can
truly support fixed point residential and
business use and mobile use. Hotspots already give us some idea of the
attractiveness of such a service, but they aren’t truly
pervasive and they won’t be. MMDS, given the proper equipment, will allow the user
to enjoy the advantages of a hotspot
anywhere and to experience true broadband data rates over a mobile phone,
something no 3G network has ever been able to
provide. We’re already getting a glimpse of what will come in the networks set up
by Walker Wireless in New Zealand. Today
they support full mobility, in addition to true high-speed fixed and portable
broadband.”

Ronny Haraldsvik, senior director of marketing at Flarion, another equipment
manufacturer that strongly favors mobility, sees a
prominent place for mobility in MMDS’ future. However, he sees the service as
being essentially complimentary to 3G.

“In Europe, the spectrum we’ve assigned to MMDS has already been allocated for
UMT,” Haraldsvik said. “We see this same
spectrum, including that designated MMDS in the U.S., generally being used to
extend the capabilities of existing mobile
networks, though that won’t be the only use. Our strategy is to target our product
toward tier-one mobile service providers.

“The method of duplexing that the broadband system uses pretty much determines
what mobile carrier you can approach,” he
added. “They want something that harmonizes with their existing system.”

Service Offerings

Flarion’s product is intended to support a range of services never previously
offered over an airlink, including Session Initiation
Protocol (SIP) IP telephony, high-quality IP video, multicast services and
high-speed multiplayer gaming. Competing platforms
do not offer explicit support for such a wide range of value-added applications.
However, the general quality-of-service
provisions embodied in the new 802.16a standard certainly facilitate the
provisioning of such time-sensitive,
bandwidth-intensive service offerings.

Hambidge, for one, sees a place for voice telephony in the MMDS service mix.

“We already have the capability of installing SIP phones in our platform and of
using our cards in small personal devices,” he
said. “Our power drain is significantly less than that of a Wi-Fi chip.”

Barbara Mellott, a Sprint spokesperson, also sees the possibility of voice and
portability.

“We want to move beyond the old concept of a fixed point, line-of-sight wireless
network, but at this point we can’t announce
any definite plans because we haven’t made them yet,” she said.

Still, it is one thing to speculate about introducing a wide range of service
offerings and quite another to do so. Even with the
cost-savings associated with an IP telephony platform vis-à-vis circuit voice,
adding a telephone option to a data network is an
expensive proposition, requiring new operations support system, billing and
fulfillment software packages. It might not be
particularly difficult for an established mobile voice service provider such as
Sprint, but for a big independent such as Nucentrix
or Clearwire, becoming a telephone carrier is essentially a whole new undertaking.
Adding entertainment content, such games
or IP video, adds a whole new level of complexity and expense along with the
requirement of entering into highly involved
negotiations with content owners.

And then there’s the matter of the spectrum itself.

“There’s really not that much of it,” commented Leary. “There’s actually a lot
more available in the unlicensed bands.”

Alan Menezes, VP of marketing at Aperto Networks, an equipment manufacturer,
voices further dissent regarding new types
of services, cautioning that mobility specifically, is years away.

“The 802.20 standards body is not very far along, which means that interoperable
equipment is years away,” Menezes said.
“Right now, 802.16 is much more compelling for the carrier.”

Finally, there’s the issue of raising additional monies to support such new
service offerings.

“I can tell you that we’re very allergic to MMDS around here,” said Bill Frezza, a
partner at Adams Venture Capital in Boston
and a former investor in a number of high-profile wireless startups. “We feel that
a number of issues that led to the early failures
are still not resolved, and we don’t believe that adding mobility is going to
clear up all of the problems. It might just create more
of them. I have a trapdoor on the floor in front of my desk leading to a pit full
of alligators. When someone walks in to pitch an
MMDS venture, I push a button and the trapdoor opens.”

Marking Time

The ultimate fate of MMDS in the United States undoubtedly rests with Sprint and
Nextel, neither of which is saying much at
present. Anticipated FCC actions are also critical (see “FCC Reconsiders the
MDS/ITFS Band”), and if that body rearranges
spectrum in the MMDS/ITFS bands and allows for contiguous data channels, the
potential of the spectrum will be much more
fully realized.

Just how well second-generation MMDS equipment performs in the field is yet to be
fully clarified. Questions remain as to
whether the technical advantages of the newer technology will translate into
profits. The competitive environment will be more
forbidding with advances occurring in other access technologies, such as DSL,
cable and passive optical fiber.

“All you can do is look at what’s happened in the unlicensed bands,” Leary said.
“WISPs are making money there today,
although they don’t get much publicity. We have reason to believe that MMDS will
be a good business as well. The unlicensed
operators went through similar travails initially until they learned how to manage
their networks for profitability. The lessons
have been absorbed now, and they can just as easily be applied to MMDS.”

About the Author: Dan Sweeney is an accomplished technology writer and a
contributor to BWB. Dan has been covering
wireless data since 1990. He can be reached at 818.954.0480 or [email-masked].

To comment on this article, please send e-mail to
[email-masked].

http://www.shorecliffcommunications.com/magazine/volume.asp?Vol=40&story=353

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