CLECs as ISPs – Multipoint Wireless Internet Access

January 24, 2000 – In earlier columns, we discussed some of the traditional Internet connectivity services as potential offerings by CLECs. In this column, we look at an emerging technology – broadband wireless services.

Not Your Typical Cell Phone
When most people think of wireless, they think of cellular telephones or point-to-point wireless circuits like those used in interexchange carrier networks. For the past several years, a number of companies have been exploring the use of broadband wireless services for multi-point Internet access directly to business and consumers.

Two of the more frequently discussed technologies used for this purpose are MMDS (Multipoint Multichannel Distribution Service) and LMDS (Local Multichannel Distribution Service).

In the 1980’s, the U.S. Federal Communications Commission (FCC) reassigned 11 unused  Instructional Television Fixed Services and OFS (Operations Fixed Services) channels for reuse by commercial operations. MMDS came first and LMDS is more recent.  The FCC allocated a substantial amount of radio spectrum to LMDS in the 1.3GHz to 28GHz band.  Data services can be offered at speeds in excess of 1 gigabit per second. Cable modems, alternatively, can run only as fast as 10 megabits per second.

According to recent reports, there are more than 250 operating MMDS systems in the US today serving more than 1.1 million subscribers. Worldwide, more than 90 countries and 4 million subscribers are being served by MMDS technology.

Prior to 1999, most MMDS and LMDS licenses had been captured by small companies looking to use the technology for wireless television distribution in competition with terrestrial cable TV services. Many of these companies recognized the potential for using this spectrum as an access tool for Internet but were poorly capitalized and too slow to develop an Internet strategy. Last year, we began to see the acquisition of these companies and their valuable spectrum by major Internet players including WorldCom and Sprint. For example, on July 21 Wireless One agreed to become a wholly owned subsidiary of MCI WorldCom, and on August 31 CAI Wireless agreed to merge with the new MCI WorldCom subsidiary.

CAI had operated six analog-based MMDS subscription video systems in New York, Rochester, Albany, Philadelphia, PA, Washington, DC, and Norfolk/Virginia Beach. CAI also owned MMDS channel rights in Long Island, Buffalo Syracuse, Providence, Hartford, Boston, Baltimore and Pittsburgh. In addition, CAI owned approximately 94% of CS Wireless Systems., an MMDS operator based in Plano, Texas.

Sprint continues in the process of buying rights to companies holding licenses or leasing rights to frequency spectrum in the MMDS band as an alternative means of reaching consumers compared with LEC facilities.

How Can Wireless Help in Internet Access?
High-bandwidth Internet access using technologies similar to MMDS or LMDS can have a direct impact on customers that are not covered by wireline facilities, and can be an excellent competitive tool against cable Internet or DSL services. Plus, wireless towers can be erected in a shorter time and with much less concern about right-of-way issues.

The major challenge with this type of wireless, however, is line of sight. The receiver and/or transmitter can be the size of a bicycle seat and actually placed in a window rather than on a roof. The device must be directly visible to the transmitter.

There are two principal services today that can be provided as an alternative to dial-up or DSL Internet access. The first uses a cable Internet modem, a standard telephone line for uplinking, and a shared wireless channel (I have seen them configured in 27 Mbps clusters and know that they can go substantially higher) for downloads per channel of bandwidth. One provider that I assisted had thirty channels available in each metropolitan area. As you can see, this allows for substantial bandwidth availability.

The transmitter must be connected with a standard Internet serving environment (access to other Internet backbones), and router configurations need to be set to manage an asymmetrical environment.

The second method of connectivity is two-way wireless with no local dial-up required. These normally use a shared 768 kbps return channel in addition to the higher bandwidth download speeds.

The list prices charged for these services are comparable with consumer level DSL, yet bandwidth can be substantially greater.

Although CLECs may initially show disdain for wireless service in general, it can be a good idea when covering regions in which building physical cable is difficult. If the objective is to anticipate and stifle your competition, you need to think seriously about broadband wireless. WorldCom and Sprint have already recognized its power. It may be possible for you to affiliate with one of these companies or others like them and private label wireless access as a way to build a broader customer base and retain those that you already serve.

Joel Maloff is founder of Maloff Group International, an Internet business consulting organization. Maloff has been an executive in local exchange and interexchange telecommunications since 1973, and has been involved in various aspects of the Internet since 1987. Maloff is the author of four books and hundreds of articles regarding Internet.