Wireless cable at crossroads: Data, telephony has operators intrigued but not convinced

To outside observers at last week's Wireless Communications Association show in Philadelphia, the industry is being torn in two directions. On one side are operators such as BellSouth that are pouring most of their effort and money into using their spectrum for digital video services. On the other side are operators looking to Internet access to pull them out of a market that has been losing customers.

Not surprisingly, which side of the video/Internet issue that operators take often depends on history and the ability to raise cash.

Among the more upbeat speakers at the show was keynoter William Reddersen, group president of value-added networks for BellSouth. The Bell regional holding company has launched digital cable services in New Orleans and Atlanta and expects to be in 10 markets by the end of the year. What's more, the company is being very aggressive on its projections, claiming it will capture 30% to 35% of the market, according to Reddersen.

Wireless, however, is just one of the company's video strategies. Starting with its existing system in Chamblee, Ga., BellSouth will continue building out wireline cable systems in new build areas and in those where it makes economic sense.

"We didn't find any single technology that will be a silver bullet," said Reddersen.

Indeed, Reddersen assured other wireless cable executives that the telco is committed to the technology. That's a far cry from the last telco entry into the market, when Bell Atlantic's proposed acquisition of CAI Wireless fizzled and Chairman Ray Smith claimed the technology was not appropriate for video.

"No war has been fought and won in modern times without an air attack first," said Reddersen. "Wireless is just one of the technologies we'll be using."

One area where the company likely won't go is Internet access. Aside from not wanting to compete with the parent company's plans, only a few of the more than 4600 Internet service providers in the U.S. are making money, he said.

"At first glance, the Internet may appear [to be] a good alternative to using spectrum, but the Internet is a crowded place," said Reddersen. "Using spectrum for Internet access ultimately may result in a bumpy ride."

But according to other executives at the show, Internet access is a requirement because of current market conditions. Most U.S. operators are financially strapped and can't convert their systems to digital, leaving them with a service that provides only 33 channels. Such systems simply can't compete against traditional cable or satellite providers.Even in markets wh ere the MMDS spectrum has been licensed recently, Internet access likely will be part of the mix. In Toronto, for example, Look TV will launch a 90-channel digital video system in August, but it also will use some spectrum for data services, said R. Scott Colbran, president and chief operating officer.

"We view it as an overlay infrastructure to our video services," he said.

Targeting small and medium-sized businesses, Look's Internet access service will use a telephone line for the return path. "Our view is that piece of the market is going to be doing more Web browsing and isn't looking for high-speed on the upstream," Colbran said. "We didn't see much of a market in the high-end business."