Kreig: MMDS Still Has D.C. Agenda


Andrew Kreig, president of the Wireless Communications
Association International (formerly the Wireless Cable Association), addressed issues
facing multichannel-multipoint-distribution-service operators in a recent interview for
News with States News Service's Laura Maggi.

MCN: Is the wireless cable industry in transition from
video to high-speed Internet?

AK: I think that might be said to be the general
broad-brush picture. However, there are a number of exceptions that are highly
market-specific. For example, it is important to emphasize that much of the change has to
do with only-analog-video providers changing their array of features. But digital-video
providers like BellSouth [Corp.] are moving strongly ahead with their services.

MCN: Is that because they are able to offer more channels?

AK: That is primarily it. An underlying factor is also
that the operators that are able to go ahead with digital are better-financed. In the
United States, the primary ones are BellSouth, GTE [Corp.] in Hawaii and Prime One in
Southern California. Prime One bought the former Pacific Bell Digital TV system. In
Canada, you had Look Communications, which rolled out with an all-digital system right
from the get-go last summer. People's Choice TV [Corp.] launched a digital-video
system in Phoenix in the past couple of weeks.

MCN: For those companies that were trying to do
analog-video systems, have a lot of them decided that Internet services are a better

AK: Both Internet and also, I think, it is more of a
phased transition. It has been several years in the development -- not purely Internet,
but also other types of data and [competitive local-exchange carrier] telephony.

MCN: What do you think the wireless cable companies
acquired by Sprint Corp. and MCI WorldCom can do for them?

AK: In MCI's case, it has less of a local presence
than Sprint does, because Sprint does have this ION [Integrated On-Demand Network] system
in place in some areas. Big picture, it seems that major companies are looking for a
bundle of service offerings on a nationwide platform.

This is nothing new to people who have been following the
AT&T [Corp.] consolidations. MMDS is part of it. It is an important part of it because
this is broadband spectrum that can deliver the Internet and all of these high-value
services very efficiently.

MCN: What do the recent acquisitions by Sprint and MCI mean
for the wireless cable industry?

AK: It is a tremendous vindication of MMDS operators,
which, several years ago, embarked on this path to expand the available technology and the
regulatory framework to bring this spectrum to its highest value as a two-way spectrum.

For just over three years, I've had MMDS Internet
access on an experimental basis here in Washington, D.C. My whole staff has been using it.
This is not a brand-new thing. It had to be carefully prepared from both a technology
standpoint and a business case, and finally, to prepare the [Federal Communications]
Commission to change the rules to ensure that the spectrum was not one-way broadcast-only,
but two-way.

This starts in the United States, but a similar regulatory
conception or trend is going on around the world.

MCN: Do you expect more wireless cable companies to sell
their services and spectrum to bigger companies?

AK: That is logical, but there is always a price that
makes sense for people to sell or not to sell. That would seem to be a logical trend, but
until there is a meeting of minds on prices, things don't happen, whatever the trend
might be.

MCN: Do you see the companies you represent eventually
becoming competitive with AT&T type of ventures, as larger companies try to take hold
of the broadband market?

AK: Potentially. There are a lot of steps there. So for
one thing, a company like AT&T has enormous economies of scale. I'm not saying
one of our companies that might recently have been in Chapter 11 is going to take on
AT&T. You have tremendous legislative and regulatory clout that can be exercised in
subtle ways that don't necessarily merit a headline, but that can be

For example, there is a House hearing that chairman [Billy]
Tauzin [R-La.] has called, and that is a vitally important hearing on access issues for
the new competitors versus the incumbents. This involves things like roof rights and
inside wiring for both alternative voice, video and data providers. [The hearing took
place May 13.] If they can't reach the customer, they are under an almost fatal

These issues are complicated and kind of boring, but if
they are not addressed by Congress, you are not going to have the competition the
Telecommunications Act of 1996 envisioned.

MCN: What kind of changes do you think need to be made?

AK: On the video side, we think Congress needs to give
some specific instruction to the FCC on inside-wiring policy issues, including the point
of demarcation for where common ownership begins.

On the data side, there is a concern that several
significant pro-competitive measures that Congress created were enacted with the view of
promoting video competition, because that was the main type of competition that existed
when Congress was thinking about these measures [in 1992 and 1996].

However on the wireless side, the same antenna can receive
video, data and voice signals. It may be that unless Congress clarifies its policy, only a
video provider receives the benefits of pro-competition policy, and someone using exactly
the same equipment to bring competition to voice and data is left out by terms of
statutory language.

MCN: Are there any regulatory and technological barriers in
terms of doing two-way transmissions with Internet and data services?

AK: Last September, the FCC issued an important two-way
ruling. It is under reconsideration, which is a fairly normal process. We would expect a
final ruling sometime in the next couple of months.

In September, we also made an extensive filing listing
about a half-dozen barriers that we thought were vital both for the commission and
Congress to address. These include the concept of forbearance being the cornerstone of any
regulatory policy for promoting entry by fixed wireless operators.

While our policies are often quite rigorous toward
incumbent monopolies or dominant market providers that come out of monopoly regimes, some
of the regulations should not be as rigorously applied to new entrants with a tiny share
of the market as they are to a company with the ability to effect pricing through market

Another concept is that the commission should exercise its
broad authority to eliminate third-party barriers that block market entry -- categories
like inside wiring, pre-emption of local tower-siting restrictions, certain
cross-ownership requirements, licensing reform and ways to expedite the issuance of
licenses so new providers do not get hung up for extended periods.

Those are the types of issues that we are focused on -- in
specifics, pretty dry stuff of the type that would mostly interest lawyers. In a
cumulative way, this really means the difference between new entrants from the wireless
sector being able to provide effective choice to consumers or not.

MCN: What about technological barriers?

AK: You can always have better equipment. I'm sure
that the equipment will improve over time, but the equipment does work, so that is not an