Pulling Out All of the POTS

The concept of wireless local loop (WLL) is a lot like the concept of wireless data. Each year, high penetration rates and success are "just around the corner." But the reality fails to live up to the hype year after year. Although WLL systems continue to spring up across the globe, they're simply not springing up as fast and as furiously as analysts predicted years ago.

Why? The most basic of reasons: cost.

"In many areas, it costs $650 to $850 per line to put in WLL and as much as $1,000 to $1,500 per line to put WLL in rural areas," said Larry Swasey, Allied Business Intelligence vice president of communications research. On the wireline side, the numbers range from $800 to $1,000 per line in urban areas and up to $2,000 or more in rural areas, depending on the network architecture, but of course wireline offers the advantage of much greater bandwidth, Swasey said.

"Certainly, when the price per line comes down, you can put WLL into areas as competition," Swasey said. "But initially, it will have to be for those who have little or no access to basic telephone services."

Those who have little or no access to basic telephone services generally live outside of the United States, which is where most analysts believe the biggest WLL growth will occur. However, that hasn't stopped some wireless carriers from testing varying WLL solutions in the United States.

One such player, Western Wireless, has chosen to deploy a WLL solution in areas of the United States that still lack basic wireline service: rural regions.

Western Wireless recently announced that it signed a Joint Statement of Interest with the Crow Indian Nation to provide WLL services on the Crow Reservation, where only 45% of households have access to basic telephone service. However, Western Wireless hasn't limited itself to underserved rural areas. The company also offers WLL in areas of North Dakota and Nevada, where people have basic service but often are charged expensive toll rates when making calls to nearby towns.

FROM POTS TO POAS? What technology is Western Wireless using to support its WLL activities? Plain old analog. That's right -- AMPS, the technology that wireless carriers supposedly are deserting.

"In rural America, we still see AMPS as being the technology of choice," said Gene Dejordy, Western Wireless executive director of regulatory affairs. "It is the most cost-effective way to serve rural America."

The beauty of the system is that the home wireless unit connects with Western Wireless' existing AMPS infrastructure. This means that there are no extra costs to the carrier, which already offers mobile service in the areas in which it offers WLL. Although Dejordy said that eventually Western Wireless intends to roll in a greater mobility component than what is offered today, it currently markets the WLL service separately from its mobile cellular service.

The WLL service consists of a laptop-like device, manufactured by Telular, which interfaces with standard communications equipment on one side and with the cellular towers on the other side. No cell-site equipment is placed near the house, and the only mobility the system offers is the ability to use battery power to take the laptop-size unit outside the house. The battery offers two hours of talk time and 12 hours of standby time. Data rates are a slow 9.6kb/s, but Dejordy claims customers don't complain.

"It's what you get used to," he said.

Swasey called Western Wireless' move a great idea, not as a money-making move, but as a public relations win. Indeed, Western Wireless' Dejordy admitted that the company's plan would not make money without universal service support.

"If we were not going to get universal service support, it does not make (economic) sense to offer this," Dejordy said. "With universal service support, you can make the business plan work."

And Western Wireless is pushing hard to prove the viability of WLL. It hired an independent consulting firm to develop a business model that would compare the cost of providing wireless local service with wireline service in different rural areas to determine in which markets it would be cheaper to install a wireless solution. According to Dejordy, the company found that if the total cost of providing universal service by wireline were $5 billion a year, using wireless in certain areas could reduce the cost 25% to $3.7 billion.

A LOCAL LOOK AT WLL Across the country in the Michigan cities of Grand Rapids, Kalamazoo and Lansing, another wireless player, Monroe, LA-based CenturyTel, is using a specification in TDMA IS-136 technology to offer its own version of WLL services, called the Zone phone. The phone acts as a cordless phone at home and as far as 7 miles away. When a customer drives outside his home zone, the phone switches over to the CenturyTel cellular network.

The technology works by creating "networks within networks," said Cedric Taylor, senior manager of TDMA product marketing at CenturyTel's infrastructure supplier, Nortel Networks. Thanks to a software programming feature, a carrier can use what is called a private system identifier (SID) or a residential SID to offer a specific set of features, such as a special billing rate or even services such as caller ID, within a specific tower-defined coverage area.

The software that supports the service resides in the switch. When a call is made, the switch checks the electronic serial number of the phone to determine whether it should be provided access to special features. Carriers are using this for more than just WLL, Taylor said. He cited Celumobil in Colombia, which offers discount rates in one of the shopping malls that contains a Celumobil retail store. Another carrier offered discount rates to college students using their phones on campus.

BOTH 1.9GHz & 800MHz SERVICE In CenturyTel's case, the carrier operates both a 1.9GHz system and an 800MHz system in the WLL markets. It uses its 1.9GHz frequencies to offer the flat-rate neighborhood service and its 800MHz network to provide the standard cellular coverage, using a single switch for both networks. On the marketing side, the promotion includes 1,000 minutes for $40 in the local zone and then a per-minute rate outside the home zone, according to Steve Daigle, CenturyTel vice president of product management and training.

The biggest challenge is refining the local area of coverage, said Justin Phillips, Nortel senior account executive. The manufacturer sat down with CenturyTel to complete a detailed engineering analysis on coverage. After the network was built, Nortel completed a drive test to compare predicted coverage to actual, which resulted in quite a bit of antenna tilting and other coverage tweaks, Phillips said.

CRICKET, ANYONE? Others in the United States also are concentrating on offering services in the local area -- and only the local area. Cricket Communications, a U.S. subsidiary of Leap Wireless International, offers local, unlimited wireless service -- with no roaming option -- in Chattanooga, TN, for $29.95 per month. The carrier plans to expand this concept into several other U.S. cities, including Memphis, TN; Salt Lake City; and Santa Fe, NM.

Because of the service's simplicity, Cricket expects to trim 10% to 20% off of its operating costs compared to traditional wireless carriers, according to Susan Swenson, Leap Wireless International president and Cricket Communications CEO. This reduction is expected to be achieved through savings such as fewer customer-service calls due to simpler bills -- Swenson estimates that as many as 60% of customer-service calls are related to billing -- and the lack of roaming-management costs.

Using standard CDMA technology and handsets, the carrier considers itself a wireline replacement.

"We're looking for people to use this as a replacement for wireline," Swenson said.

But Cricket is not offering data, and, not surprisingly, many of the carrier's customers are not using the service as a replacement for wireline altogether but instead as a second line.

Although CenturyTel's Daigle said a significant percentage of his customers actually have canceled their home wireline service, he added that most of these are young users who live alone. Other than those users, the second-line market is about the only place wireless will achieve significant success as a local-loop solution -- at least in the United States, according to Swasey.

"All this talk of wireless replacing wireline is a myth," he said. "The only thing we've seen is substitution, such as pay phones and second lines."

He offers one daunting point: If you examine the number of customers who have churned from their wireless carriers each month and compare them with the total number of people who have left their wireline carriers in the last three years, the number is about equal.

It's a sobering thought.