For those telecommunications executives involved in the day-to-day tasks of selling and deploying ordinary telephone service, it can be difficult to step back and appreciate just how momentous the changes are that are occurring in this industry. We truly stand at the edge of a new world, a world in which the Internet will be used to facilitate e-commerce transactions and provide entertainment, videoconferencing, and a number of hitherto undreamed-of applications. After years of hearing about the holy grail of convergence (the blending of television, personal computers, and phones into one device and the blending of voice, data, and video onto one network), the Internet is finally pushing these changes with breathtaking rapidity.

It is now appropriate to point out one other important trend of convergence: the seamless blending of the wireline and wireless broadband networks. In the past, customers grew accustomed to wireless meaning either their convenient but sometimes unreliable mobile phones or maybe even a direct broadcast satellite connection for advanced TV service. On the other hand, customers expected that their phone and Internet service to their homes and businesses would always be provided by wires. It was just what people were accustomed to.

Today, a newly accepted definition for wireless is emerging. With Sprint and MCI WorldCom's major purchases of fixed wireless operators in the multichannel multipoint distribution system (MMDS) band and the emergence of Wall Street sweetheart startups such as Teligent and WinStar, service providers and customers alike are beginning to think of wireless as the primary method of providing all the voice, broadband data, and video services that one could ever want, straight to a home or a business.

The Access Problem

For years, a number of technical and business problems have prevented a widespread penetration of broadband connections between customers' premises and the service providers. Either it was too complicated or too expensive, and the benefits of deploying new networks combining just voice and video services seemed too low. With the rapid infusion of the Internet into our lives, the need for broadband capabilities has never been so pressing. Communications carriers can select from an ample number of broadband two-way wireline access architectures:

• Integrated services digital network (ISDN)

• Fiber-to-the-home (FTTH)

• Fiber-to-the-curb (FTTC)

• Hybrid fiber coax (HFC) with cable modems

• Digital subscriber line (xDSL)

• Wideband personal satellite communications systems

• The high-frequency fixed wireless systems dubbed local multipoint distribution system (LMDS), digital electronic messaging service (DEMS), and 38 GHz

• The lower-frequency MMDS systems³⁸

LMDS

Historically speaking, the radio industry has long been ruled by skeptics who believed that there would always be an acute spectrum shortage and thus little room for broadband spectrum allocation. However, most failed to see that the migration to digital radio and higher frequencies eventually would cause a spontaneous spectrum glut. This is what has happened today. LMDS is just one of several new allocations that will help make obsolete the old paradigm that claims that radio is only good for narrowband services.

LMDS occupies the largest chunk of spectrum ever devoted to any one service. Located in sections of the 27.5- to 31.3-GHz band, LMDS can consist of a bandwidth of up to 1.3 GHz. This is in stark contrast to cellular, which consists of 25 MHz, or PCS, which consists of 30 MHz. Via the transmission of microwave signals, LMDS networks can provide two-way broadband services, including:

• Video

• High-speed Internet access

• Telephony services³⁹

Many vendors have developed a full portfolio of equipment for the LMDS band and are actively marketing it to service providers. Since there are no standards, vendors approach the market in very different ways. For example, while some vendors promote time division duplexing (TDD) as the best frequency-sharing scheme, others prefer frequency division duplexing (FDD). The lack of standards for equipment has been one of the worst problems in terms of ensuring interoperability and keeping costs down. It is expected that third-generation (3G) wireless system standards will be one influence on the development of standards for LMDS.

Even though high-frequency fixed wireless has had a limited impact on the telecommunications market thus far, INSIGHT expects the total revenue from data services over LMDS alone in the United States to be $787.9 million by 2005.

MMDS

The MMDS frequencies, located in the 2.1- to 2.7-GHz band, are another option to deliver broadband wireless services. The MMDS frequencies traditionally have been used to provide a one-way analog wireless cable TV broadcast service. As such, the MMDS industry has been more widely known as the wireless cable industry.

The history of the wireless cable industry has been rife with failure. The smaller operators have, for the most part, been unable to generate a profitable business using the frequencies for the transmission of analog video. Several ILECs boldly claimed that MMDS would be their avenue to effectively compete with the cable TV operators, only to sell their MMDS properties off and retreat back into their telephony shell. Only BellSouth remains a significant provider of MMDS video service alongside its landline cable service (though several ILECs have since built semisuccessful landline cable TV services). The U.S. markets for residential video are crowded by broadcast TV, direct broadcast satellite (DBS), and cable, and the limited channel capacity of analog MMDS simply could not compete.

Yet, all of a sudden, MMDS frequencies have become the hot properties of 2000. Why is this portion of the spectrum just now catching the attention of the telecommunications industry? The answer is that MMDS is seen as a viable broadband service delivery option. The Internet has changed everything. MMDS providers are establishing Internet-focused subsidiaries, feverishly upgrading their existing networks with digital compression capabilities, and moving rapidly to install a return channel to create interactive capability. Unlike their counterparts operating in the LMDS band, who mainly target businesses in metropolitan areas, the MMDS providers mostly want to tap the pent-up demand for broadband digital data and TV directly into the home. Advantages of using MMDS include:

• It has chunks of underutilized spectrum that will, once completely digital, become increasingly valuable and flexible.

• System implementation, which is little more than putting an installed transmitter on a high tower and a small receiving antenna on the customer's balcony or roof, is quick and inexpensive.

• Moreover, since MMDS services have been around for 20 years, there is a wealth of experience—at least with respect to the one-way distribution technology.⁴⁰

36, 37 -    "Appendix III: Transmission," Telecommunication Engineering Centre, Department of Telecommunications, Government of IndiaKhurshid Lal Bhavan, Janpath, New Delhi 110001, India, 2000.

38, 39, 40 -    "LMDS and MMDS: Fixed Wireless Options in Telecom Networks 1999ý2004," The Insight Research Corporation, Gatehall I, One Gatehall Drive, Parsippany, NJ 07054, 2000.