BELLSOUTH BUY MAY BOOST MMDS PROSPECTS

If broadband wireless is making a comeback, BellSouth's acquisition of MCI's multipoint multichannel distribution service (MMDS) properties could position the Bell company at the head of the resurgence. BellSouth, which owns MMDS and complementary wireless communication service (WCS) licenses throughout the Southeast, submitted a $65 million bid for MCI's fixed wireless unit, according to a BellSouth spokesman.

The RBOC submitted a $3.9 million deposit on the properties, and the two companies have agreed on a $1.4 million break-up fee and $520,000 expense reimbursement for BellSouth if the deal falls through.

The agreement must be approved by the bankruptcy court, which should occur in the next 60 to 75 days. Other bidders could surface during that time, the BellSouth spokesman said. Verizon Communications, which may be looking for broadband wireless properties to supplement its DSL efforts, is another possible suitor, along with Sprint, according to one source who requested anonymity.

While MCI is looking to unload the MMDS properties to gain cash for its exit from bankruptcy, and carriers such as Sprint have capped their fixed wireless sales efforts, BellSouth has held onto its own MMDS and WCS licenses for markets such as New Orleans/Baton Rouge, Orlando/Tampa/St. Petersburg, Nashville, Miami, Atlanta, Charlotte and others. BellSouth also launched a test fixed wireless network in Daytona, Fla., earlier this year using a 2.3 GHz WCS spectrum license.

“The MMDS/WCS spectrum [rights] are potential solutions,” said BellSouth chief technology officer Bill Smith, commenting on the utility of MMDS but not on the proposed deal itself. “The belief is that it's another tool in your toolkit.”

Smith said BellSouth also continues to operate a trial MMDS network in New Orleans only because it must use the spectrum or lose the rights to its license. “While the customers absolutely loved the service, our success on line-of-sight installation was not what we wanted.”

That persistence may soon pay off.

Andrew Cole, senior vice president of the wireless practice at Adventis, said MMDS is evolving into a more reliable service with the application of orthogonal frequency division multiplexing technology to make it effective in non-line-of-sight applications.

“Making it non-line of sight has forced companies to position it in new ways and not just as a DSL or cable replacement,” said Peter Jarich, senior analyst for wireless infrastructure at Current Analysis.

Cole added, “It may be a patchwork medium, but it makes more sense as a filler solution for an RBOC than as an access medium for a company like MCI.”