To & Through the MBU

Mar 15, 2001 12:00 PM, Derek Kuhn

You’ve established your fixed-wireless link to an office building. Now how do you distribute the signals?

From a carrier’s perspective, business tenants in a multiple business unit (MBU) may have only two things in common — their street address and the fact that they probably don’t have fiber access to their building. Other than that, their telecommunications requirements and the opportunities these represent to a carrier are driven solely by the needs of their individual businesses. So, when addressing the MBU market, carriers must decide not only how to get to the building, but also how to ensure flexibility of services and connections within the building.

To Each His Own

Think about it: When was the last time you went into an office building accommodating multiple businesses that all did the same thing?

Take this building, for example: The anchor tenant is a medium-size business that does interactive Web design. It has a couple of T1s for access. The dentist on the second floor is using dial-up. This building also houses a day-care center, an insurance broker and some retail stores on the first floor including a bank branch and a couple of restaurants, all with varying connectivity requirements.

This building does not look like the buildings nearby nor was it even built in the same decade. In fact, almost every building in the area differs in shape, size and age from its neighbor.

The individual buildings in the area may warrant different access strategies, and the communications needs of the tenants likely will be as diverse as their businesses.

Go Forth & Multiply

Multitenant units (MTUs) offer a high concentration of potential broadband-access customers whether they are residential or commercial, so carriers are increasingly looking at how to better address telecommunications services within the multitenant building.

Over the last two years, noticeable progress has been made. In 1999, penetration rates for multitenant broadband access in North America ranged from approximately 10% to 30%, while for 2000, some carriers were reporting as much as 60%. Both incumbent carriers and CLECs began targeting the MTU market. In fact, a whole new category of carrier has even emerged known as the building LEC (BLEC), focusing exclusively on providing and distributing broadband services to and within buildings.

Exclusive agreements between carriers and gatekeepers such as real estate investment trusts, building owners, or management companies drew a lot of attention as they shut out competition for that multitenant customer base. Although the tenants within may be the actual customers, carriers also are challenged to satisfy and excite the gatekeepers.

The consulting firm Yankee Group is predicting 100% penetration in the residential broadband market by 2003 (www.yankeegroup.com). One can interpret that of the buildings that have access to broadband, 100% of their tenants will have broadband connectivity by 2003. This would translate into 7.2 million multidwelling-based broadband users by 2004.

Cahners In-Stat group reports that the compound growth rate for the MTU services market is expected to be 64% per year with estimated service revenues in 2004 of $780 million (www.instat.com).

The market opportunity is self-evident. Also clear is the fact that carriers must have a robust strategy for the multitenant market. They have to offer the services that the customers want and that will make the property more marketable for its owners. Since this must be accomplished with, of course, as little capital expense as possible, the carrier must determine the most cost-effective in-building distribution without sacrificing the customer’s access to broadband services.

The Question: How?

The MTU or shared-tenant-unit designation is typically subdivided into the following three categories: residential or multidwelling units (MDUs); commercial or MBUs; and the hotel/institutional segment, frequently called the multihospitality unit.

Focusing on the commercial tenant, a successful business-model strategy for service delivery to MBUs is based on aggregating the demand of smaller businesses located within a single building to offer advanced and affordable voice and data services and onsite support.

Of course, the challenge already recognized is that each building and business customer has different needs.

To entice customers to broadband services, the right service mix must be offered. Some of the small customers will be happy with best-effort access to the Internet, while the branch office of a much larger company may require virtual private network (VPN) connectivity for corporate LAN access, intranet and e-mail.

Still, larger operations may want leased-line services and a mix of voice and data. Providing these various services can be accomplished in different ways.

There is a high probability that the MBU does not have fiber running into the basement unless it is in a dense metro area with high-volume users in close proximity. Fiber continues to be installed by incumbent carriers in metro areas; however, the small and medium enterprise (SME) customers likely will find a high-bandwidth fiber solution expensive while providing more capacity than they need today.

Cable addresses the residential market and SOHO applications well and will be a competitor in the MDU market. However, unless you are a cable operator, cable is not a technology that can be used successfully for in-building broadband service distribution.

Typically, a carrier would address the larger end of the SME spectrum and power users with fractional, single or bundled T1s, though the majority of the SME market will likely need or have a connection smaller than a T1 today.

As an alternate carrier, there are options for reaching the building and offering a competitive service building-wide: lease copper from the incumbent carrier or bypass the local loop using broadband wireless access.

Get There By Air

A point-to-multipoint broadband wireless technology such as LMDS offers a very effective, high-bandwidth method of addressing the multitenant building with rates of up to 40Mb/s. Originally referring to spectrum in the 28GHz range, LMDS now generally encompasses all the bands above 10GHz.

LMDS is a line-of-sight technology with a single wireless base station able to service buildings up to 6 miles away using 10GHz spectrum or up to 3 miles away when bands above 24GHz are used. In addition to LMDS spectrum, the 2.6GHz and 3.5GHz bands also can be used to cover distances up to 9.3 miles at 3Mb/s per customer.

As an option for accessing large numbers of MBUs within a given area, LMDS offers the obvious benefit that there is no need to lease copper or install fiber to achieve fiber-like broadband connectivity. This translates into time and money savings that result in faster market capture and an almost immediate return on investment.

With increasing pressure on competitive carriers to improve the bottom line, the ability to quickly capture lucrative MBU customers via broadband wireless presents an extremely compelling opportunity.

In fact, all of the benefits generally attributed to the use of LMDS apply to its application in the MDU market. LMDS requires a relatively small up-front investment. This, combined with the fact that it enables a demand-based build-out, results in a very favorable fixed/variable cost ratio.

Taking It All In

Once at the building via the broadband wireless link, the carrier has three ways of addressing the customers in that building:

• The provider could place a fixed-wireless, network-termination (NT) device in one or more of the tenant suites and connect all of the NTs to a single radio-termination (RT) device on the roof of the building. It has the flexibility to use NTs with subscriber ports that fit the customer’s specific needs. For example, a customer might want a single leased line or a combination of leased line and Ethernet service. The carrier also can offer frame relay or ATM services all over the radio link simply by choosing an appropriate network termination.

• The carrier has the flexibility to collocate a layer 2 or layer 3 switch with the fixed-wireless network termination and distribute services using IP. This option enables the carrier to cable from the switch to the customer and simply provide an Ethernet port which can be used for Internet access, e-mail and VPN services.

The wiring is done using Category 5 or 6 copper twisted-pair cable, which, in itself, is not expensive. If the carrier is faced with a building with limited or no space left in the cable riser, it will have to pull cable from the switch to the customer and may be required to X-ray, core concrete and install a fire-stop at each floor penetration. This work also may require a permit and inspection, which can delay service delivery. In this case, the wiring installation cost may warrant consideration of a service distribution that makes use of existing in-building wiring instead.

• The carrier also can co-locate a DSL access concentrator (DSLAM) in the building. DSL technology is capable of riding on existing copper twisted pairs, installed for telephony services when the building was built. Some DSL access technologies can make use of in-service copper loops by running the DSL at a frequency band which is not a disturber to plain old telephone service (POTS).

In cases other than large multi-dwelling residential buildings, a DSLAM that was designed for deployment in the neighborhood central office (CO) is not appropriate since it was designed to service hundreds of customers.

The large CO DSLAMs that aggregate bandwidth capabilities may, indeed, be substantially more than the wireless link. However, there are smaller multitenant DSLAMs available, which can support as few as eight customers, scaling up to a mid-size DSLAM with 100 or more subscriber ports.

Each of the three options in these MBU configurations aggregates demand from multiple customers and can offer advanced services specific to the customers that require them. Current wireless LAN options have been precluded from consideration because of potential security and floor penetration issues. However, they may soon emerge as viable and should be kept in mind for future application.

As described in the third configuration, DSL can be used successfully to offer services in the MBU without the expense of pulling new cable to each customer.

The boom in the broadband-access market has resulted in very cost-effective DSL customer-premises-equipment (CPE) products, which can offer data services such as IP routing, bridging and VPNs as well as voice services such as POTS and ISDN. T1 and E1 leased-line ports also are available. In addition to the variety of CPE, there also are several variants of DSL access.

Asynchronous DSL (ADSL), typically used in residential applications, uses a single copper pair and can run on the same loop as POTS. Under optimum loop conditions, ADSL’s theoretical performance is 8Mb/s downstream and 640kb/s upstream. Performance of each customer’s link will be dependent on distance and condition of the copper loop.

Distances within a building are typically quite short, so depending on the condition of the wiring, a carrier should be able to achieve impressive performance.

Many business customers will be satisfied with an ADSL service; however, some will require symmetrical service offered by G.SHDSL which also uses a single copper pair and can run on the same loop as POTS. A G.SHDSL link will perform at 2.3Mb/s (symmetrical service) under optimum loop conditions.

Still other DSL variants are able to address business customers with 2- and 4-wire transport including SDSL, HDSL and VDSL.

Tenants in Common

What’s becoming increasingly evident is that business tenants in an MBU have more in common than their street address and lack of fiber access. The third thing they have in common is the excellent revenue opportunity they present to carriers who can address their varying needs.

Cost-effective, high-bandwidth solutions such as LMDS will help the carrier reach the building. But, once inside, the challenge of meeting the diverse needs of business tenants demands that a carrier employ a distribution strategy that is flexible in terms of both services and rates. DSL offers that flexibility for in-building distribution.

Perhaps the new wave of BLECs will also coin a new acronym to describe this broadband wireless/wireline approach to capturing the MDU market. How about LMDSL?

---

Kuhn (derek.kuhn@alcatel.com) is Alcatel director, product management, fixed wireless.