Broadband wireless operators build their case

The window of opportunity for delivering local multipoint distribution service is open wide-for operators that can position their companies just right.

"The [LMDS] industry needs a viable business plan," said Mark Foster, co-founder and former CEO of BizTel Communications, which was recently sold to Teleport Communications Group. "We are only just seeing it occur." Like many in the LMDS industry, he believes that businesses-mainly small to medium-sized-make up the most appropriate target market for wireless broadband systems.

"Leave the residential market to other technologies for the time being," he said. Although most players agree that the business market makes the best target, some believe that large residential buildings could offer lucrative targets.

The case for chasing the business market is strong. Fiber today reaches nearly 3% of the 750,000 office buildings in the U.S., said Hamid Akhavan, vice president of engineering for Teligent. Even though that 3% actually reaches 35% of fiber-addressable businesses, he said, it still leaves 65% of the market not served by fiber and open for LMDS players to target.

This portion of the market is looking for alternatives. "The incumbents are underserving small and medium-sized businesses," noted Chuck Riggle, product manager of wireless broadband access for ADC Telecommunications. In the future, this lack of attention to small to medium-sized businesses may hurt the incumbents and offer opportunity to LMDS players. Bell company revenues should begin to decrease around 2006, Foster said, and competitive local exchange carriers will experience 367% growth until that same time.

Although the opportunity for wireless broadband solutions is strong, LMDS players don't imply that they can replace existing or even future fiber connections. "Use the infrastructure that is in place to get to the concentrated customer units," Foster said.

LMDS operators can choose a building already connected by fiber as a "mini hub point," said Kevin Lynch, vice president of wireless services for TCG. After all, wireless is "just an access technology. We can do anything with wireless that we could do with fiber," he said.

However, the lower cost of implementing broadband wireless systems and the speed with which operators can implement them offer LMDS players an advantage over those laying fiber. Where 80% of the cost of implementing wireline systems is dedicated to labor and 20% to capital, the opposite is true for wireless and the capital expense is much less, said Allan Zendle, vice president of engineering and systems planning for WinStar.

In addition, repair times are much shorter with broadband wireless systems than fiber, Lynch said.

Zendle also said that point-to-multipoint systems offer a fourfold improvement of spectrum efficiencies over point-to-point systems. Much of this efficiency stems from the LMDS hubbing capability that eliminates the need for antennas dedicated to each link.

The scalability of LMDS systems also offers operators a cost advantage over fiber competitors. "New operators don't know what penetration and churn will be like," said Suresh Arora, vice president of Hughes Network Systems. Operators can start with one sector, placing one radio at a hub and adding equipment as traffic builds.

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