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LMDS and MMDS: Fixed
Wireless Options in Telecom Networks
1999-2004
a market research report
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Today a newly accepted definition for wireless is emerging––it’s not just for mobile phones and satellite TV anymore. With MCI WorldCom/Sprint’s major purchases of fixed wireless MMDS operators, and the emergence of wireless CLECs like Teligent and WinStar, service providers and customers alike are beginning to think of wireless as the primary method of providing all the voice, broadband data, and video services that one could ever want, straight to a home or a business.
LMDS and MMDS, with digital two-way capability, give long distance carriers a relatively cheap entrée into the local market, with multiple operating benefits––in many regions, they will not need to negotiate with the incumbent telco. They will not need to co-locate DSL equipment in an operator’s central office, nor will they need to upgrade existing one-way cable plants to provide two-way functionality. LMDS and MMDS have huge chunks of under-utilized spectrum ready to go, more than enough to satisfy pent-up demand for high-speed Internet access.
However, broadband wireless must jump some hurdles. MMDS has an unprofitable 20-year run as an analog wireless TV service, and LMDS extends only two to three miles from each transmitter, requiring large
numbers of antennas. Also, convincing customers that wireless is as reliable as wireline may be tough. One ill-timed service outage could hobble the industry irreparably.
LMDS, MMDS: Fixed Wireless Options in Telecom Networks identifies the possible windfalls and pitfalls of broadband wireless, reviewing the
technologies, major players, vendor strategies, revenue forecasts, and access line growth. The report also
provides revenue projections of competing broadband technologies––DSL and cable modems––and quantifies consumer and business demand for high-speed access. Insight offers recommendations for bundling wireless services and targeting potential customers.
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Report Excerpt
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Wireless Broadband
For those telecommunications executives involved in the
day-to-day tasks of selling and deploying ordinary
telephone service, it can be difficult to step back and
appreciate just how momentous the changes are that are
occurring in this industry. We truly stand at the edge of
a new world, a world in which the Internet will be used
to facilitate e-commerce transactions, provide
entertainment, video-conferencing, and a number of
hitherto undreamed-of applications.
After years of hearing about the holy grail of
convergence--the blending of television, personal
computers and phones into one device, and the blending of
voice, data and video onto one network--the Internet is
finally pushing these changes with breathtaking rapidity.
It is now appropriate to point out one other important
trend of convergence: the seamless blending of the
wireline and wireless networks. In the past, customers
grew accustomed to “wireless” meaning either
their convenient but sometimes unreliable mobile phones,
or maybe even a direct broadcast satellite connection for
advanced TV service. On the other hand, customers
expected that their phone and Internet service to their
home and business would always be provided by wires. It
was just what people were accustomed to.
Today, a newly accepted definition for wireless is
emerging. With Sprint and MCI WorldCom’s major
purchases of fixed wireless operators in the multichannel
multipoint distribution system (MMDS) band, and the
emergence of Wall Street-sweetheart startups like
Teligent and WinStar, service providers and customers
alike are beginning to think of wireless as the primary
method of providing all the voice, broadband data, and
video services that one could ever want, straight to a
home or a business.
The Access Problem
For years, there have been a number of technical and
business problems preventing a widespread penetration of
broadband connections between customers’ premises
and the service providers. Either it was too complicated
or too expensive, and the benefits of deploying new
networks combining just voice and video services seemed
too low. With the rapid infusion of the Internet into our
lives, the need for broadband capabilities has never been
so pressing.
Communications carriers can select from an ample number
of broadband, two-way wireline access architectures:
- Integrated services digital network (ISDN);
- Fiber-to-the-home (FTTH);
- Fiber-to-the-curb (FTTC);
- Hybrid fiber coax (HFC) with cable modems; and
- Digital subscriber line (xDSL).
There are even further options available in the wireless
realm, including:
- Wideband personal satellite communications systems;
- The high frequency fixed wireless systems dubbed local
multipoint distribution system (LMDS), digital electronic
messaging service (DEMS), and 38 GHz; and
- The lower frequency MMDS systems.
Each wireline and wireless method has its advantages and
disadvantages. Yet breakthroughs in radio technology,
along with increased industry confidence following the
success of personal communications service (PCS) and
cellular mobile services, have dramatically improved
confidence in radio as a reliable local access
technology. In addition, digital technology has greatly
improved the signal quality of broadband wireless
systems, and permits operators to greatly increase the
amount of data that can be sent across a particular
amount of spectrum.
LMDS
Historically speaking, the radio industry has long been
ruled by skeptics who believed that there would always be
an acute spectrum shortage, and thus little room for
broadband spectrum allocation. However, most failed to
see that the migration to digital radio and higher
frequencies would eventually cause a spontaneous spectrum
glut. This is what has happened today. LMDS is just one
of several new allocations that will help make obsolete
the old paradigm that claims, “Radio is only good
for narrowband services.”
LMDS occupies the largest chunk of spectrum ever devoted
to any one service. Located in sections of the 27.5 to
31.3 GHz band, LMDS can consist a bandwidth of up to 1.3
GHz. This is in stark contrast to cellular, which
consists of 25 MHz, or PCS, which consists of 30 MHz.
Via the transmission of microwave signals, LMDS networks
can provide two-way broadband services including:
- Video;
- High-speed Internet access; and
- Telephony services.
A LMDS network can be composed of a series of cells that
each deliver point-to-multipoint services to subscribers.
Each transmitter in a cell serves a relatively small
area, about two to three miles in diameter. This small
cell size means that the LMDS network requires a large
number of antennas. As cellular and PCS industry
experience has shown, this can be troublesome, since
there are only so many places where antennas and hub
equipment can be installed.
Many vendors have developed a full portfolio of equipment
for the LMDS band and are actively marketing it to
service providers. Since there are no standards, vendors
approach the market in very different ways. For example,
while some vendors promote time division duplexing (TDD)
as the best frequency sharing scheme, others prefer
frequency division duplexing (FDD). The lack of standards
for equipment has been one of the worst problems in terms
of ensuring interoperability and keeping costs down. We
expect third generation (3G) wireless system standards
will be one influence on the development of standards for LMDS.
Even though high-frequency fixed wireless has had a
limited impact on the telecommunications market thus far,
INSIGHT expects the total revenue from data services over
LMDS alone in the US to be $676.8 million by 2004.
MMDS
The MMDS frequencies, located in the 2.1 GHz to 2.7 GHz
band, are another option to deliver broadband wireless
services. The MMDS frequencies have traditionally been
used to provide a one-way, analog wireless cable TV
broadcast service. As such, the MMDS industry has been
more widely known as the “wireless cable”
industry.
The history of the wireless cable industry has been rife
with failure. The smaller operators have, for the most
part, been unable to generate a profitable business using
the frequencies for the transmission of analog video.
Several regional Bell operating companies (RBOCs) boldly
claimed that MMDS would be their avenue to effectively
compete with the cable TV operators, only to sell their
MMDS properties off and retreat back into their telephony
shell. Only BellSouth remains a significant provider of
MMDS video service alongside its landline cable service
(though several RBOCs have since built semi-successful
landline cable TV services). The US markets for
residential video are crowded by broadcast TV, direct
broadcast satellite (DBS) and cable, and the limited
channel capacity of analog MMDS simply could not compete.
Yet all of a sudden, MMDS frequencies have become the hot
properties of 1999. Why is this portion of the spectrum
just now catching the attention of the telecommunications
industry? The answer: MMDS is seen as a viable broadband
service delivery option. The Internet has changed
everything. MMDS providers are establishing
Internet-focused subsidiaries, feverishly upgrading their
existing networks with digital compression capabilities,
and moving rapidly to install a return channel to create
interactive capability. Unlike their counterparts
operating in the LMDS band who mainly target businesses
in metro areas, the MMDS providers mostly want to tap the
pent-up demand for broadband digital data and TV directly
into the home.
Advantages of using MMDS include:
- It has chunks of under-utilized spectrum that will,
once completely digital, become increasingly valuable and
flexible.
- System implementation, which is little more than
putting an installed transmitter on a high tower and a
small receiving antenna on the customer’s balcony or
roof, is quick and inexpensive.
- Moreover, since MMDS services have been around for 20
years, there is a wealth of experience--at least in
respect to the one-way distribution technology.
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Market Segmentation
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- Service Revenue by
Access Technology
- Cable Modem/HFC
- DSL
- 24GHz/38GHz
- MMDS
- LMDS
- LMDS Annual Subscribers
and Churn Rate
- MMDS Annual Subscribers
and Churn Rate
- LMDS Access Lines
- MMDS Access Lines
- Total CPE and Service
Revenue
- Penetration of Wireline
Broadband Access
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Table of Contents
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Chapter I
EXECUTIVE SUMMARY
1.1 Overview
1.2 The Access Problem
1.3 LMDS
1.4 MMDS
Chapter II
LMDS APPLICATIONS AND SERVICES
2.1 Overview
2.2 The 1998 LMDS Spectrum Auctions
2.2.1 Players
2.2.1.1 The Entrepreneurs
2.2.1.2 Foreign Operators
2.2.1.3 Power Utilities
2.2.1.4 The Incumbents
2.2.1.5 Wireless Operators
2.2.1.6 The CLECs
2.2.2 Auction Results
2.3 The 1999 Auction Results
2.4 Other High Frequency Bands
2.4.1 24 GHz (DEMS)
2.4.2 38 & 39 GHz
2.5 Services
2.6 Marketing and Sales Challenges
2.7 The Business Case
Chapter III
FIXED WIRELESS ARCHITECTURE AND LMDS TECHNOLOGY
3.1 Basic Wireless Concepts
3.1.1 Mobile Wireless Networks
3.1.1.1 Cellular
3.1.1.2 PCS
3.1.1.3 3G Wireless Systems
3.1.2 Hybrid Fixed and Mobile Networks & WLL
3.1.3 Fixed Wireless Networks
3.1.3.1 Point-to-Point vs. Point-to-Multipoint
3.1.3.2 Network Elements
3.1.4 Terminology
3.1.4.1 Frequencies of Operation
3.1.4.2 Spectrum Sharing
3.1.4.3 Modulation
3.1.4.4 Total Network Capacity
3.1.4.5 Power
3.1.4.6 Availability
3.2 Basic LMDS System
3.2.1 Backbone Architecture
3.2.1.1 Fiber Trunks
3.2.1.2 Point-to-Point Microwave Trunks
3.2.1.3 Hybrid Backbone Architectures
3.2.2 Hub Sites and Base Stations
3.2.3 Subscriber Equipment
3.3 Network Planning
3.3.1 Connectivity
3.3.2 Equipment Interoperability
3.3.3 Cell Size Selection Criteria
3.3.4 Intercell Interference
3.3.5 Sectorization and Cellularization
3.4 Operations Support Systems Issues
3.5 The Wireless ATM/IP Debate
3.5.1 Development of Wireless ATM Systems
3.5.2 IP
Chapter IV
LMDS EQUIPMENT VENDORS
4.1 Alcatel USA
4.2 Ensemble Communications, Inc.
4.3 Lucent Technologies/Netro
4.4 Newbridge Networks
4.5 Nortel Networks
4.6 SpectraPoint Wireless
4.7 Triton Network Systems, Inc.
4.8 Other Players
4.9 Chip Development
Chapter V
LMDS, DEMS AND 38 GHZ SERVICE PROVIDERS
5.1 Advanced Radio Telecom Corp.
5.2 Nextlink Communications, Inc.
5.3 Speedus.com, Inc. (CellularVision)
5.4 Teligent, Inc.
5.5 WinStar Communications, Inc.
Chapter VI
MMDS APPLICATIONS
6.1 Overview
6.1.1 Early Days of Distance Learning
6.1.2 The Emergence of Wireless Cable TV
6.1.3 Revival of Interest in the Spectrum
6.2 The MMDS Spectrum
6.3 The 1996 Auctions
6.4 The Movement to Two-Way Digital MMDS
6.5 Digital Services
6.5.1 Video
6.5.2 Broadband Internet Access
6.6 The Unlicensed Frequencies
6.7 The Business Case
Chapter VII
MMDS TECHNOLOGY AND EQUIPMENT
7.1 Overview
7.2 MMDS One-Way Video Distribution Architecture
7.2.1 Head End
7.2.2 Transmitter
7.2.3 Receive Site Components
7.3 Two-Way Networks & Network Planning Problems
7.3.1 Interference
7.3.2 Network Extension Methods
7.3.2.1 Increasing Capacity
7.3.2.2 Increasing Coverage
7.4 Specialized MMDS Equipment Vendors
7.4.1 ADC Telecommunications
7.4.2 Andrew Corporation
7.4.3 Gigabit Wireless
7.4.4 NextNet
7.4.5 Spike Technologies, Inc.
Chapter VIII
FIXED WIRELESS INTERNET ACCESS INFRASTRUCTURE
8.1 Overview
8.2 Network Architecture
8.2.1 One-Way With Telephone Return Path
8.2.2 Two-Way MMDS Setup
8.3 Selected Wireless Cable Modem Products
8.4 Access & Service Availability
8.5 Security Concerns
Chapter IX
MMDS SERVICE PROVIDERS
9.1 American Telecasting, Inc.
9.2 CAI Wireless Systems, Inc.
9.3 MCI WorldCom, Inc.
9.4 People’s Choice TV Corp. (SpeedChoice)
9.4.1 Markets & Services
9.4.2 Network Infrastructure
9.5 Sprint Corporation
9.6 Other Players
Chapter X
MARKET FORECASTS
10.1 Overview
10.2 Drivers of Demand for Broadband Services
10.2.1 Business Customers
10.2.2 Residential Customers
10.3 Total Broadband Market
10.4 Wireline Access Methods
10.4.1 Telephony
10.4.2 Fiber
10.4.3 DSL
10.4.4 HFC/Cable TV Networks
10.5 Penetration of Wireline Broadband Access
10.6 Wireless Broadband Market
10.6.1 Wireless Broadband Rollout Status
10.6.2 Wireless Broadband Market Forecasts
10.6.2.1 Digital Microwave
10.6.2.2 MMDS
10.6.2.3 LMDS
10.7 Conclusions
Table of Figures
Chapter I
I-1 Total US LMDS Revenue, 1998-2004 ($Millions)
I-2 Local Access Investment, Sprint MMDS Assets vs.
AT&T Cable Assets ($Billions)
I-3 Total US MMDS Revenue, 1998-2004 ($Millions)
Chapter II
II-1 LMDS Spectrum Layout
II-2 Top Ten LMDS Spectrum Winners By Amount Bid, 1998
($Millions)
II-3 Population Covered by Top Ten LMDS Spectrum Winners,
1998 (Millions)
II-4 LMDS Coverage Ownership of the Top 30 US Markets,
1999
II-5 Monthly Average Revenue for LMDS Services
Chapter III
III-1 Wireless Local Loop Network
III-2 Point-to-Multipoint Architecture
III-3 LMDS System Components
III-4 LMDS Backbone Architectures
III-5 Example of an CPE Antenna and Network Interface
Unit
Chapter IV
IV-1 Consecutive Point Ring Architecture
V-1 WinStar’s Building Access Rights, 1996 to 1998
VI-1 Homes Covered Within MMDS Market Areas, 1996 and
1997
VI-2 Total MMDS Subscribers, 1996 and 1997
Chapter VII
VII-1 A Point-to-Multipoint Architecture With Satellite
Feeds
VII-2 A Digital MMDS Transmitter/Antenna Layout
Chapter VIII
VIII-1 Wireless Internet Access Using Telephony Return
Path
VIII-2 Wireless Return From a Customer Site to an
Internet Headend Using QPSK
Chapter IX
IX-1 ATI’s Tiered Internet Access Pricing, Portland,
OR
Chapter X
X-1 Share of Online Services by Access Technology, 1998
vs. 2004
X-2 Total Households and Business PCs Online, 1998-2004
(Millions)
X-3 Total US Broadband Access Lines, 1998-2004 (Millions)
X-4 Total Broadband Services Revenue, 1998-2004
($Millions)
X-5 Growth of DSL vs. Cable Modem Access Lines, 1998-2004
(Millions)
X-6 Average CPE Price and Service Revenue, Broadband
Wireless Service, 1998-2004
X-7 Total 24 GHz and 38 GHz Access Lines, 1998-2004
(Millions)
X-8 Total CPE and Service Revenue, 24 GHz & 38 GHz,
1998-2004 ($Millions)
X-9 Total MMDS Access Lines, 1998-2004 (Millions)
X-10 Total CPE and Service Revenue, MMDS, 1998-2004
($Millions)
X-11 LMDS Deployment Timeline
X-12 Total LMDS Access Lines, 1998-2004 (Millions)
X-13 Total CPE and Service Revenue, LMDS, 1998-2004
($Millions)
X-14 Share of Broadband Access Lines by Technology, 1998
vs. 2004
X-15 Broadband Services Revenue by Access Technology,
1998-2004 ($Millions)
X-16 Broadband CPE Revenue by Access Technology,
1998-2004 ($Millions)
X-17 Broadband CPE and Services Revenue by Access
Technology, 1998-2004 ($Millions)
Table of Tables
Chapter II
II-1 Allotted Bandwidth of Various Wireless Services
II-2 LMDS Auction Frequencies and Specifications
II-3 Comparative LMDS Auctions, 1998 and 1999
Chapter III
III-1 TDMA vs. FDMA in Fixed Wireless Systems
III-2 Phase Shift Keying vs. Quadrature Amplitude
Modulation
III-3 Spectral Efficiencies of Various Modulation Methods
III-4 How Modulation and Operating Frequency Affect The
Power Level
(Example of P-Com)
III-5 Network Planning Tradeoffs
III-6 Fiber Trunking Advantages and Disadvantages
III-7 Wireless Trunking Advantages and Disadvantages
III-8 Functions of a Typical LMDS Network Planning OSS
III-9 ATM vs. IP
Chapter IV
IV-1 Range of Lucent’s OnDemand Equipment by
Modulation Format
Chapter V
V-1 ART’s Spectrum by Market
V-2 Nextlink LMDS Licenses
V-3 Speedus.com Service Plans
V-4 Teligent’s Spectrum Licenses & Operating
Status
V-5 WinStar’s Spectrum Ownership
Chapter VI
VI-1 The LECs’ Quixotic Plans to Offer Video
Services, 1997
VI-2 US MMDS Spectrum in the 2.1 to 2.7 GHz Range
VI-3 Designation of MMDS Response Channels
VI-4 MMDS Auction Final Statistics
VI-5 Winners of MMDS Licenses in 10 Largest BTAs
Chapter VIII
VIII-1 Selected MMDS/LMDS Wireless Cable Modem Products
Chapter IX
IX-1 American Telecasting Licensed Markets, Households,
And Activity Status
IX-2 CAI Wireless & CS Wireless Licensed Markets,
Households, And Activity Status
IX-3 People’s Choice TV: Principal Markets and
Product Offerings
IX-4 Sprint’s MMDS Acquisitions: Total Cost, Total
Households, and Market Areas
Chapter X
X-1 Projected Households with Personal Computers,
1998-2003 (Millions)
X-2 Projected Households Online, 1998-2003 (Millions)
X-3 Share of Online Services by Access Technology,
1998-2004
X-4 DSL Versions
X-5 Activity Status of MMDS, 24 GHz, LMDS, and 38 GHz
Services in the Top 50 MSA Markets, 1999
X-6 Activity Status of Wireless Broadband Access Services
in the MSA Markets 51-100, 1999
X-7 Annual Additional Subscribers and Churn Rate, 24 GHz
& 38 GHz, 1998-2004 (Millions)
X-8 Annual Additional Subscribers and Churn Rate, MMDS,
1998-2004 (Millions)
X-9 Annual Additional Subscribers and Churn Rate, LMDS,
1998-2004 (Millions)
X-10 Share of Broadband Access Lines by Technology,
1998-2004
X-11 Total Broadband Access Lines by Technology,
1998-2004 (Millions)
X-12 Broadband Services Revenue by Access Technology,
1998-2004 ($Millions)
X-13 Broadband CPE Revenue by Access Technology,
1998-2004 ($Millions)
X-14 Broadband CPE and Services Revenue by Access
Technology, 1998-2004 ($Millions)
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