The WLL to Succeed

Wireless local loop (WLL) has become synonymous with growth and opportunity. It represents the possibility of one day truly competing in the local telephone market and taking competition to new heights. But still in its infancy, WLL in the United States is anything but a sure win. In fact, if the LMDS auction (spectrum that is expected to play a role in future WLL applications) is any indication of what is to come, the wireless underdogs still have some skeptics to win over. National newspaper articles have referred to the LMDS auction as "a disappointment" and a "flop." Other WLL players face similar skepticism. Competing in the United States isn't going to be easy for anyone, regardless of spectrum.

FROM THE DUGOUT In this game, which pits wireless visitors against the wireline home team, the marketplace and players are still undecided. In fact, most vendors and carriers haven't even taken the field yet.

"I don't see a lot of activity," said Peter Nighswander, The Strategis Group director for cellular and PCS. "People talk about it, but I haven't seen enough to say there really is a market there."

One reason for the slow activity simply may be that U.S. carriers are trying to understand exactly what WLL means domestically. Most of today's predictions for opportunity refer to the international market. Although worldwide growth numbers are available for these regions, finding predictions for U.S. growth isn't so easy. Traditionally, WLL has been used to describe international efforts at offering wireless service as a basic telephony alternative in developing countries. According to Allied Business Intelligence, the United States has the largest telecom infrastructure in the world with more than 100 million lines in place. That means there's not much need for wireless to build out basic telephony service, except in a few rural areas.

So when experts talk about WLL opportunities in the United States, what exactly are they talking about? According to Bill Zucker, Spectrian vice president of marketing, WLL is a generic term that everyone uses a little differently.

Nighswander agreed. "It's tough to pinpoint."

Overall, WLL has become an umbrella term for a variety of applications. For example, optimists tout WLL as the replacement for landline service in the residential market. According to Marty Cooper, ArrayComm chairman, eventually someone will take advantage of the available spectrum to offer services that compete with landline.

But others aren't ready to comment on the possibilities of wire-line replacement. During a recent WLL seminar, Nortel's Michael Hayes, general manager, decided to "stay away from" the concept in his speech. On the other hand, some skeptics are vocal about the fact that today's cellular and PCS technology isn't ready to act as a wireline replacement. Admittedly, the mobile market is growing at a fast rate, but, Nighswander said, these same subscribers aren't necessarily going to throw away their landline phones and use wireless as a substitute. Although people don't necessarily like their local phone companies, at least they know whom they are dealing with and know they're getting reliable phone service that works. Wireless carriers can't yet offer that 100% reliability, he added.

Cooper agreed that wireless carriers have many obstacles to overcome before they can start to fantasize about replacing landline service. According to Cooper, of the total minutes of telecommunications talk time in the United States, only about 1.4% is transmitted over a wireless device, which means there's a lot of work to do. Wireless carriers need to offer highly reliable, uninterrupted phone calls with high quality.

"Right now cellular and PCS are light years away from that," he said.

But as technology advances, a variety of opportunities may open for WLL in the United States. For example, second and third phone lines are increasing with the demand for fax and Internet applications. According to Allied Business Intelligence, eventually WLL will offer a competitive solution for these applications in the residential market. The office environment is another market segment that may prove a possible growth area.

"The wireless office is really coming around full circle into WLL," said Jim Mullen, Hughes Network Systems Wireless Networks Division director of marketing. "It just happens to be a wireless local loop tied into the wired voice network."

According to Nighswander, large businesses may use fixed wireless for voice and data wideband images. Licensed carriers that implement WLL solutions may be able to offer a full suite of services instead of just usual voice communications.

As the industry tries to pinpoint these various segment opportunities, most companies are holding back on U.S. deployments. Although they predict future growth, they don't expect it anytime soon. According to Charlie Yang, Watkins-Johnson director of wireless product management, a variety of issues beyond technology problems need to be addressed. For example, costs will have to come down before consumers will seriously consider paying for these wireless options, he said.

Cost is a concern for carriers as well. During a WLL seminar, Craig Farrill, AirTouch Communications vice president of strategic technology, said that current infrastructure costs for WLL are too high for a solid business case. They need to be cut in half for WLL to really take off, he added.

According to analysts and carriers, regulatory issues also are putting up barriers to accessing the local telephone market.

"Today's policy does not encourage (wireless carriers) to get into the local loop," Yang said.

During a WLL seminar, Robert Pepper, FCC Office of Plans & Policy chief, said that there are jurisdictional questions about who will regulate WLL offerings. State regulation is different for mobile and fixed services, added Western Wireless' Gene DeJordy, director of regulatory affairs. According to the Telecom Act, CMRS can offer local service, but the Act didn't state how that service should be regulated. Once wireless becomes equivalent to wireline, carriers have to realize a different regulatory regime than they are used to. There is no state and limited FCC oversight, DeJordy said. And these issues can hinder local market entry.

"The key to success in the WLL marketplace is resolution of regulatory issues," Spectrian's Zucker agreed.

Despite these obstacles, a few vendors such as Lucent, Nortel and Tadiran already are touting their WLL and fixed wireless solutions in the United States through trade shows and press releases. But for many vendors, the investment in the U.S. market is still too risky and uncertain.

"There is always the risk that the market won't deliver," said Mike Boyle, Phoenix Wireless president & CEO. So for now, most companies will focus their attention on international markets."In the developing world, building the la st mile with radio is the way to go (where no wire exists)," said Jyrki Salo, Nokia Telecommunications, Americas, president. "That's why our focus is in the developing world."

Many companies, including Hughes Network Systems, Inter-Digital Communications, Siemens AG and Qualcomm, continue to announce WLL trials in places such as Africa, Asia, India and Russia. But in the United States, many are taking a wait-and-see approach. When the U.S. market irons out its issues, expect a proliferation of new products and players in this market as well. And wireless carriers will be closely watching these developments.

"All of the carriers certainly have teams of people looking at wireless local loop," Mullen said.

They may be in a variety of divisions at the telecommunications companies, he added, but they all are playing the WLL game. They just have a lot to consider as they try to justify the business case for competing in this market. In addition to overcoming technology and regulatory challenges, carriers have to decide where they will fit in and what their market niche will be, Nighswander said.

As they set their strategies, they're watching to see who the players will be: cellular, PCS, LMDS or other spectrum users. According to Mullen, they also are deciding what technology to use; they may even mix and match some technologies.

THE PLAYING FIELD With all of these decisions and uncertainties, many carriers are not ready to take the field, but there is a handful of carriers already warming up. WLL service is becoming a reality in one rural Nevada town where 50 customers, who previously were without home phone lines, currently receive fixed wireless service.

Centennial Cellular also is making WLL services a reality. The carrier commercially deployed its first services in Puerto Rico in August 1997. It now provides more than 6,800 subscribers with their first home phone service. Rudy Graf, president & COO, said the service is readily accepted and adding new customers every month. Now, Centennial is ready to take its services to the next step: wireline replacement.

"We have not really done that marketing push yet, but we're putting it together now," Graf said. "We're going to go head to head with people with existing service."

AT&T Wireless Services also has received attention over its WLL Project Angel services in Chicago. But even as these carriers take initial steps, completely entering the local service market will be challenging for all wireless players.

"You can't overestimate the difficulty of a new company or even an MCI or AT&T trying to get into the local market," ArrayComm's Cooper said. "AT&T is trying to do this with Angel, and is just barely getting started. It's going to take a while."

So, even though a few carriers are making efforts to enter the WLL market, most industry experts still are skeptical that the U.S. local loop market will take off anytime soon. They have wide-ranging predictions from as little as five years to more than 15 years from now. For now, most of these ideas are just that, ideas.

"There are a lot of great ideas," Zucker said, " but we have to be careful."

"(WLL in the United States) is sort of the same as overseas: any type of wireless link to a subscriber where you use the system inside the home and outside. It could be fixed or mobile." -- Peter Nighswander, The Strategis Group

"My general definition (of WLL in the United States): choices, competition, anything that competes with telephone companies and telephone service." -- Marty Cooper, ArrayComm chairman

"Wireless local loop is a wireless alternative access mechanism to support or enhance existing wireline terminals and telecommunications services." -- Charles Cook, US West Advanced Technologies director for wireless technology and chair of TIA's TR-45 Ad Hoc Committee on WLL