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Our series takes a look at Chapter 7: Local Multipoint Distribution Service (LMDS) Design Technology.

After several delays and protests over who would be allowed to participate, the auctions of broadband spectrum for local multipoint distribution services (LMDS) have been over for quite a while. Now the wireless industry is watching as licensees begin the next major step of trying to put in place viable commercial services. This part of the chapter takes a look at some of the significant challenges and opportunities facing licensees.

The Process

LMDS uses millimeter-wave signals in the 28-GHz spectrum to transmit voice, video, and data signals within cells 3 to 10 miles in diameter. The FCC will allow license holders to use up to 1.3 GHz of wireless spectrum in the 28-GHz Ka band.

In 1997, the FCC released the service and competitive bidding rules for LMDS spectrum in the 27.5- to 28.35-GHz, the 29.1- to 29.25-GHz, and the 31.0- to 31.3-GHz bands. The FCC's rules are summarized as follows:

• 1300 MHz of LMDS spectrum was split into two licenses, one for 1150 MHz and one for 150 MHz. They are licensed in basic trading areas.

• Over their strong protests, the ILECs and cable TV (CATV) companies were prohibited from obtaining LMDS licenses in their regions for 3 years.²¹

Participants took 5 weeks and 128 rounds of bidding to claim the broadband spectrum in auctions. Two spectrum blocks were assigned in 493 markets, the A block containing 1150 MHz and the B block containing 150 MHz.

The Winners

The top 10 winners and additional information about them are listed in the sidebar, "The Winners." Both licensees and equipment vendors were happy with the way the auctions turned out.

Future Auctions and Such

Certainly the wireless broadband technology and spectrum give service providers an incredible amount of bandwidth to deal with. Also, several major vendors are stepping up to the plate to provide the hardware, software, and other key needs of licensees. Vendors considered as the most likely to carve out significant market shares are Nortel, Lucent Technologies (Murray Hill, NJ), Alcatel Telecom (of France with U.S. offices in Richardson, TX), and Bosch Telecom (of Germany with U.S. offices in Irvine, TX). In addition, Sweden's Ericsson and Germany's Siemens also may become significant players.

Unproven?

Vendors strongly dismiss the idea that LMDS is an un-proven technology. Instead, they point out that it is based on very well established microwave radio and other telecommunications systems. This technology has been proven to work and to work well.

In the United States, CellularVision has been quietly operating an LMDS system. CellularVision is currently providing high-speed Internet service and 49 high-definition TV channels. It also provides telephony services. In fact, LMDS was once seen as a competitive alternative to CATV. However, none of the new LMDS licensees are currently talking about offering entertainment services to the mass market. Instead, industry executives say they see a migration period. First, they will offer high-speed data services to businesses in concentrated service areas, notably core business districts. In many cases, these businesses also may be competitive local exchange carriers (CLECs) seeking to extend their services the last mile. This would allow the fastest, lowest cost of deployment and a quick return on investment.

Note: The FCC granted CellularVision the only U.S. license as a pioneer's preference.

Buying into the Market

Bosch sees LMDS as a chance to establish a beachhead in the North American market. The company purchased the radio business of Texas Instruments (Dallas) as a launching pad. As part of that deal, Bosch acquired all assets and technology associated with multipoint systems and hired its 90 employees. The TI unit was one of that company's attempts to create commercial business from its defense group in the early 1990s. Bosch also has set up a shop in Silicon Valley to be closer to the small companies that are developing enabling technology for an array of products and services.

There is no question that LMDS is going to be a major business. The customer demand is proven. While the ramp-up may be a little slower than some are forecasting because of various complexities, 2001 is seen as the year of major commercial rollouts.

LMDS/LMCS Buildout Strategies and Opportunities

Revenues from competitive local exchange carrier (CLEC) business services topped $5.3 billion in 1999, according to Frost & Sullivan, of Mountain View, California. The consulting firm believes that such soaring revenues (combined with opening of the local market) will prompt CLECs to strive to become one-stop shops for an array of telecommunications services. The aspect of having a single service provider for all the telecommunications needs of an organization is attracting the attention of business customers who are constantly searching for ways to improve operational efficiency.

Other strategies being employed by CLECs to improve business include adding access lines to their networks and allowing provisioned services to an increasing number of business customers, exploiting interconnection agreements to enter the local market quickly, and promoting the increased use of the Internet, high-speed data transfer, and enhanced voice services.

Frost & Sullivan predict that business data services will grow extensively as a large number of businesses turn to Internet-related offerings. Currently, there are more than 180 CLECs operating in the United States. However, 83 percent of the market is controlled by a handful of large, nationwide facilities-based CLECs: Teleport Communications Group, Intermedia Communications, McLeod USA, GST Telecommunications, and ICG Communications.

LMDS/LMCS Applications/Services

This part of the chapter presents a telephony solution for local multipoint distribution service (LMDS) using technology for personal communications services (PCS). An actual system based on digital enhanced cordless telecommunications (DECT) has been implemented as an example. The system architecture of the DECT-based LMDS telephony system is discussed. Performance measurement results show that a DECT-based system does not have stringent frequency stability requirement and therefore can allow low-cost implementation.