The FCC controls LMDS spectrum licenses for carriers. In 1998, it awarded licenses for most major metropolitan areas, chopping up a huge chunk of spectrum into multiple slices.

Each metropolitan area was awarded two LMDS licenses. The first allocation is a massive 1150 MHz, oddly broken up into three slivers. The second is a paltry 150 MHz, itself in two pieces. So only the larger license holder has enough spectrum to have an effect on its local market, with a technological monopoly in its target area.

Further, the LMDS license holder isn't required to do anything with its license for 10 years, nor is it ever required to offer a service directly to end customers. The holder may simply sell cheap bandwidth to the incumbents who'll use it to deliver traditional services and then pocket the profit. This is a good business model for the license holder and the incumbent LEC, but it will be your cash lining their pockets.

Problems and Potential Carriers build LMDS services somewhat like traditional cellular networks, using 3-to-10-mile cells. The service can carry more than a gigabit of traffic on a beam about the size of a kite string, an image that pretty well illustrates LMDS' first technical challenge--the carrier hub and the customer antenna need to be in line of sight to one another. This can make distribution difficult, especially in areas where roof access is expensive or impossible to acquire--already a significant challenge for competitive local exchange carriers.

Yet LMDS' first application was in a densely populated metropolis, when it was developed by CellularVision to distribute cable television service in Brooklyn, N.Y. CellularVision is now using LMDS to provide Internet access, and doing it right: The company is delivering 1.5 Mbps to the customer for $50 a month--that's one-tenth the price of traditional equivalent incumbent offerings, and finally some evidence of the network-access price drop we've been anticipating since the Internet went mainstream.

Beyond CellularVision and a handful of wholesale providers, carriers in the United States have very little real experience with LMDS. Trials have been limited and conducted only in relatively small markets. Equipment vendors don't have a full set of standards to guarantee interoperability. Without standard equipment, all components in each cell must come from the same vendor, exposing the carrier to a considerable risk.

Fortunately, the IEEE 802 Study Group on Wireless Access is expected to forward a plan for LMDS standardization by next month. The LMDS folks better hope that cable modems and xDSL (Digital Subscriber Line) haven't gobbled up their market before they've had a chance to deliver compliant equipment to customers.

On the Bright Side Prospects appear to be a little brighter overseas. Service providers in South America and Asia have operational LMDS systems, and trials are under way on every populated continent. Many of these installations are traditional one-way broadcast television systems, blanketing the developing world with The Jerry Springer Show. Video-on-demand systems will make it almost criminally painless to order "Too Hot for TV." But that's not innovation.

In the Philippines, Pilipino Telephone Corp. has shown that LMDS can deliver high-speed data service reliably. This is an ideal test ground because of the incredible volume of rain in the region, and the fact that rain can wreak havoc with poorly designed LMDS networks. In the torrent of a Manila rainstorm, with precipitation reaching five inches per hour, the PILTEL system kept cranking. Using sophisticated power-management and other proprietary techniques found in the Wytec Causeway system that's being used in the trial, it's been proven that LMDS networks can overcome rain fade, which is LMDS' most prominent technical problem.

PILTEL's service would make stateside network managers drool. The Wytec Causeway2 equipment deployed in Manila can deliver up to eight OC-3s per cell, and network interface units at customer sites offer eight POTS lines, a T1/E1 link and a 10/100 Ethernet interface. If the price were right and carrier reliability were high, we would gorge ourselves on this stuff.

Bellcore states that LMDS can deliver 99.99 percent reliability, but a highly dependent network won't be built on the cheap. As is common in wireless networks, LMDS service quality is likely to vary widely, resulting in both good and bad LMDS installations. When carriers cut corners with large cell sizes and oversubscribe hub bandwidth--always a strong temptation when entering a new market--users will suffer the consequences.

So chalk up another missed opportunity for the telcos. LMDS may indeed be too much: Too much risk, too much cost, too much work to standardize and, in the final analysis, simply too late to market. As other access options become available, LMDS may never get its moment in the sun.

Send your comments on this column to David Willis at dwillis@nwc.com.