With LMDS Rollouts Here, Tech Issues Emerge

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Now that commercial rollouts of wireless-broadband systems
ranging from 2.5 gigahertz to 38 GHz are finally under way, a number of long-postponed
issues must be addressed before anyone knows what the true potential of their business is.

The extent to which these issues could affect the impact of
point-to-multipoint fixed-wireless services on the competitive landscape was made clear by
a leading industry executive in a speech at the recent Wireless Communications Association
International conference in New Orleans.

"What we need today is a true end-to-end network
solution and, as of today, we're not seeing that coming out of the vendor community,"
Formus Communications Inc. chief technology officer Ray Nettleson said.

Nettleson listed high equipment costs and the need for
repeaters and integrated premises-distribution solutions as major barriers to progress for
Formus. That firm is deploying LMDS (local multipoint distribution service) facilities in
several European and Latin American countries and New Zealand, and it has a relationship
with U.S.-based Nextlink Communications Inc., the leading LMDS-license holder in the
United States.

The costs and availability of equipment are such that
Formus and other operators can deliver a competitive package of services to "the
biggest buildings in town," where equipment costs can be spread across a large
in-building user base, Nettleson said.

But the potential market base for wireless broadband could
be much larger, because wireless is much cheaper than fiber, even at today's prices for
wireless components, he added.

To put the wireless-broadband connections in reach of
smaller buildings, system vendors will have to adjust the system costs on a
per-work-station basis to only a few hundred dollars, versus the $1,000 or more that the
systems cost today, Nettleson said.

Even more important, he added, vendors need to concentrate
on "getting signals from the rooftop to the desktop," which can entail
significant costs.

"I think the vendor community is only just starting to
think about this problem," Nettleson said.

Making matters worse is the fact that even though the
addition of two or three repeaters per cell can double the coverage to as much as 80
percent of the potential customer base, operators mostly have to turn to third parties
rather than buying repeaters directly from system vendors.

The wireless-broadband community also faces a daunting task
in figuring out how to scale networks beyond a handful of transmitter sites to accommodate
coverage across an entire metropolitan area, where dozens of sites might be required.

Confusion on this issue is so intense that some experts are
claiming that the effective available bandwidth using MMDS (multichannel multipoint
distribution system) technology at 200 megahertz per territory is on a par with the
bandwidth efficiency of LMDS, where each operator has 1.15 GHz to work with.

Such claims show a lack of understanding of all of the
factors that must be considered in weighing relative efficiencies among various
wireless-broadband-spectrum tiers, where the propagation characteristics deteriorate as
the frequency level goes up. So said Bob Foster, chairman and founder of Wavtrace Inc., a
supplier of wireless-broadband-access systems at the millimeter wave frequencies at and
above 28 GHz.

"What you have to realize is that when you go to
multiple cells, the limiting factor in terms of frequency reuse becomes the
signal-to-interference ratio, and that's directly related to the modulation level you use,
independent of what frequencies you're operating at," Foster said.

"With MMDS, you're not going to be able to get away
with 64 QAM [quadrature amplitude modulation] if you're counting on a reuse strategy to
compensate for the limited bandwidth," he added.

Therefore, with the loss of the higher bit rate per hertz
of 64 versus 16 QAM, for example -- which translates to about five bits per frequency
cycle versus two -- the 200 MHz of frequency loses a lot of its aggregate throughput in
exchange for a move to multiple cells.

Foster said the best way to look at the two types of
platforms is to view LMDS as ideally suited for high-capacity service requirements in
urban areas. MMDS is better for lower-capacity requirements in less dense residential

"The bottom line is that LMDS has the bandwidth
advantage, but MMDS has the propagation advantage, and it's best to design systems
accordingly," he added.

Such issues will have a major impact on how Sprint
Communications Co. and MCI WorldCom Inc. use their MMDS holdings as they move to
cellularization in an effort to increase bandwidth efficiency for two-way service

Officials acknowledged that they are still sorting through
the technical issues to determine how to design their systems.

"We've learned a lot about MMDS since we began
acquiring systems, and now we know what we don't know," said Kevin Brauer, president
for national integrated services at Sprint.