Sprint One-Ups Rival, Buys Out PCTV Control

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The battle lines are being drawn between two of the
nation's top long-distance carriers for an unlikely prize: wireless cable licenses.

Last week's agreement by Sprint Corp., the No. 3 LDC,
to acquire People's Choice TV Corp. (PCTV) for $126 million, and No. 2 LDC MCI
WorldCom's reported purchase of bonds in several wireless cable companies, have made
wireless cable spectrum a very hot ticket.

Both MCI and Sprint are interested in
multichannel-multipoint-distribution-service spectrum as a "last-mile"
connection between their long-distance and Internet networks and customers' homes.
Sprint, MCI and other LDCs currently pay high fees to local telephone carriers for that
connection.

Sprint wants to use PCTV's spectrum for its
"Integrated On-Demand Network" (ION), a high-speed voice, videoconferencing and
Internet network that it expects to launch in 35 cities before the end of the year.

Sprint believes that PCTV's spectrum can reach about
7.8 million homes in markets including Chicago; Detroit; Indianapolis; Houston; Phoenix;
St. Louis; Milwaukee; Salt Lake City; Tucson, Ariz.; and Albuquerque, N.M.

Sprint spokesman Russ Robinson said the added cost of
deploying the wireless network will be minimal, mainly because Sprint already has several
towers of its own around the country as part of its Sprint PCS digital-wireless-phone
network. Those towers could also hold MMDS-transmission devices.

Robinson said that by using the MMDS spectrum, Sprint ION
could deliver download speeds of 25 megabits per second and upload speeds of 3.5 mbps.

Sprint agreed to purchase 12.9 million shares of PCTV stock
at $8 per share last week. Earlier this month, Sprint purchased preferred stock and
warrants representing about 20 percent of the company for $23.3 million.

Robinson would not speculate on whether Sprint plans to
invest in other wireless cable companies. He added that Sprint has said before that it
would look at all access methods to deliver the ION service, including asymmetrical
digital subscriber line, fixed wireless and cable-modem technology.

Sprint isn't the only interexchange carrier with an
interest in wireless cable.

MCI has apparently been buying bonds in several wireless
cable companies -- including CAI Wireless Systems Inc., CS Wireless Systems Inc., PCTV and
Wireless One Inc. -- to gain access to their MMDS spectrum.

The Sprint deal caused a resurgence in wireless cable
stocks, which have languished since the mid-1990s, when several regional Bell operating
companies had picked MMDS as the transmission medium of choice to deliver television
signals to customers.

Line-of-sight constraints and shifting business priorities
caused many of the RBOCs to scrap those deals.

Stock prices for CAI, PCTV and Wireless One have risen
exponentially in the past month, before the MCI and Sprint rumors began circulating. CAI
saw the biggest gain, closing at $21.94 per share April 14, an increase of almost $20 per
share since March 15.

Other stocks that have seen big gains between those dates
include PCTV, which climbed to $7.34, an increase of $6.54; and Wireless One, which closed
at $1.81, up from 24 cents a month ago.

After those telco deals were canceled -- most notably Bell
Atlantic Corp.'s $100 million investment in CAI -- many in the industry believed that
wireless cable was dead in the water.

"It's been said that MMDS is a technology in
search of a business," Paul Kagan & Associates Inc. private-cable analyst John
Mansell said. "Now, maybe it's found its home as a high-speed Internet
service."

Mansell added that it is still up in the air whether MCI
will end up battling Sprint for the remaining MMDS spectrum held by other companies.
However, he added, if MCI wants in on MMDS spectrum, it's going to have to act fast.

"It remains to be seen if MCI is going to pick a fight
and try to go after the stock [in other wireless companies]," Mansell said. "But
based on what has happened in past weeks, it looks like that is what it will have to
do."

Some industry observers expect MCI to announce an
acquisition of CAI -- which has by far the largest amount of spectrum of the four
companies -- soon.

According to several industry observers, Sprint has been
looking seriously at several wireless companies -- particularly CAI and PCTV -- for more
than a year.

While Sprint was apparently investigating whether to make
equity investments in the two companies, MCI decided to do an end-around play and buy up
their debt.

Because most of these MMDS companies had gone through or
are going through bankruptcy proceedings, owning their debt basically means owning the
company.

Sprint does not need bondholder approval to acquire PCTV,
and it is unlikely that MCI will make a competing bid for the wireless company's
stock.

Even if MCI loses out on PCTV, it still could make a
substantial amount of money on its bond position. According to some bond analysts, MCI
paid about 50 cents on the dollar for the PCTV bonds, which mature in 2004.

"Any bondholder who bought PCTV bonds in 1999 has made
an excellent investment decision," said one bond analyst who asked not to be named.

PCTV's 13.125 percent bonds are callable at 106
percent of face value June 1, 2000. Since the face value of the bonds is $332 million, if
Sprint calls the bonds next year, it will have to pay the bondholders a total of $351.9
million.

And if MCI bough the bonds at 50 cents on the dollar -- or
about $166 million -- the company stands to gain a windfall of $185.9 million.

MCI spokesman Frank Walter would neither confirm nor deny
MCI's reported bond positions in other wireless cable companies.

Walter said MCI is investigating several different
technologies to deliver broadband services, including ADSL, fixed wireless, wireless cable
and cable modems.

"We clearly recognize the importance of giving
customers as many choices for high-speed access as possible," he said.
"We're keeping our options open."

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