Wireless Wires

Local multipoint distribution service (LMDS) is designed to replace the last mile of wire with wireless and provide higher-speed data access than wireline carriers can offer. It generally costs less to implement and maintain, and it promises data speeds of up to 45Mb/s in licensed spectrum at the 10GHz, 26GHz, 28GHz and 38GHz bands.

Although the distance that can be covered at these frequencies is short, there is more spectrum available in each band. This and the fact that the data links are between fixed points means that higher data rates are possible. Although the term LMDS generally is applied to the systems that will occupy spectrum auctioned by the FCC for this use, companies also offer these services on spectrum that they licensed before the auctions.

ECONOMIC MODEL It is easy to make a case for LMDS deployment in countries where little if any copper has been laid because carriers can perform a cost analysis to compare running copper wire or fiber cables vs. installing point-to-multipoint wireless communications systems. But because these systems operate only over short distances and the equipment required on both ends is expensive, a logical question is whether there is an economic model that makes sense for the deployment of LMDS where copper wires and fiber already exist today.

In the United States where copper wire, fiber and coax cable already is installed in most metropolitan areas, does it make sense for an LMDS carrier to build and deploy a system? At first blush, it would appear as though the answer to this question would be no, it does not. Copper and fiber, after all, can handle fairly high rates of data speeds, and the technology to offer higher-speed data over standard copper pairs is advancing rapidly. Copper can handle modem speeds of 56kb/s with ease. ISDN systems handle speeds of up to 128kb/s, and XDSL systems offer speeds of up to 1.5Mb/s. Fiber, of course, can handle even higher speeds, and cable systems can be used to deliver data at speeds of 1Mb/s or more.

So why would any company in the United States decide to get into the LMDS business, especially in major metropolitan areas? The answer might surprise you. WinStar, one of the oldest and most established companies offering high-speed data and voice services in many major metropolitan areas, has discovered the key to success with LMDS, and others are preparing to follow in its footsteps.

WinStar learned early on that the demand for its wireless last-mile service might not come from a company that wants to make use of LMDS for its own communications system. It found that the real demand came from landlords that own multiple-occupant office buildings. These buildings already have copper and, in some cases, fiber running into them from the street. Why would they be interested in LMDS? The answer is simple. The conduits that house the cables have reached their capacity, and pulling new copper and/or fiber into these buildings is almost impossible -- and certainly expensive.

Tenants of such buildings find that not only is it difficult or impossible for them to obtain additional bandwidth for their offices, but in cases where it is possible, it often takes months between the time of ordering the services and actually receiving them. There is documentation to suggest that companies have moved from one office complex to another to solve their bandwidth problems.

POTENTIAL MARKET Landlords that are trying to keep their existing tenants or to attract new ones represent a large market for LMDS. If the building owner purchases bandwidth from an LMDS provider, it arrives on the rooftop via a wireless link. Fiber can be strung from the rooftop downward to each floor in a building, and then either fiber or copper can be used to deliver the bandwidth to the tenants.

Companies with their own corporate campuses also can run out of street-level-fed bandwidth. Companies that need redundancy because their communications networks are mission-critical can opt for both fiber and wireless access to and from their buildings, as well. Often, when a single tenant finds that it will have a problem getting additional bandwidth into its location, the landlord is unaware that there is a solution. As more LMDS providers come on-line, the cost of these services will diminish, and awareness will be heightened.

PREPARING FOR LMDS ROLL-OUTS In mid-April, Lucent Technologies announced state-of-the-art broadband-access products called OnDemand. These offerings include end-to-end solutions that incorporate Lucent's portfolio of data networking, optical networking, switching and access products with an integrated point-to-multipoint wireless-access system supplied by Netro. These systems, operating in licensed LMDS spectrum, can be deployed quickly and are delivered via the customer's existing LAN.

Thus, at least for the major metro areas of the United States, one can make a case for building out LMDS and show that there can be a substantial return on investment. As the Internet becomes more graphics-, audio- and video-intensive, corporations will require continually higher thoroughput. LMDS offers a logical solution.

LMDS & CONSUMERS However, it is doubtful that the same level of return on investment can be achieved for suburban areas populated mostly with residential dwellings. Because spectrum used for LMDS is in the microwave bands, distances are severely limited. As a result, the economics of serving residential communities are problematical. Installing LMDS to feed an office tower and offering the services to all of the tenants is far different from installing individual transmitters and receivers on suburban homes. Although the cost to provide access to companies can be justified by both the LMDS vendor and the building owner, most individuals will not make the same choice -- even if LMDS provides faster and more capable data connections.

Several companies already are in trials in various parts of the United States to determine the true implementation costs of LMDS as well as the "take" rate among various types of business and personal users. As this country runs out of available copper bandwidth, more and more fiber is being put into the ground. Could LMDS provide a viable and cost-justifiable alternative to fiber in the street? The answer may be in the air above you.