Wireless Broadband Faces More Delays

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The wireless-broadband sector continues to be buffeted by
technical and regulatory challenges that are pushing commercial rollouts ever further into
1999.

These developments are occurring as escalating worldwide
demand intensifies the pressure on vendors to deliver solutions.

Wireless licensees in the vanguard of deployment of new
point-to-multipoint technology are still targeting late 1998 for initial rollouts. But
some that had expected to name suppliers by now are still sorting through their options,
while others that have named suppliers are still experimenting with various iterations of
the radio and other component technologies that comprise the new network paradigm.

Meanwhile, the licensing process in LMDS (local multipoint
distribution service) is taking longer than anticipated. And new questions have arisen
with regard to the procedures surrounding the licensing of Teligent Inc., a key player in
the vanguard of wireless-broadband companies with nationwide aspirations that are
operating in spectrum outside of the LMDS zone.

"I could be wrong ... but it doesn't look to me
like we, or anyone else, will be able to move forward with significant commercial
deployments before mid-'99," said Ron Olexa, chief technical officer of Advanced
Radio Telecom.

ART is a privately held provider of point-to-point services
in the 38-gigahertz tier that is preparing to move into point-to-multipoint operations in
most of the top 100 U.S. markets.

ART, based in Bellevue, Wash., is preparing to deploy
packet-switched infrastructures in Seattle; Portland, Ore.; and Phoenix that are to be
operational by year's end. The company would like to make use of point-to-multipoint
transmitters over those networks as soon as possible, Olexa said.

But Olexa hasn't seen anything in the lab testing
under way at ART's supplier, Lucent Technologies, to suggest an early time frame.
Lucent is committed to finding solutions through OEM (original equipment manufacturer)
agreements with outside suppliers, as well as through the use of technology that it
acquired earlier this year from Hewlett-Packard Co.

ART -- with an average of 200 megahertz of spectrum to work
with in 90 of the top 100 markets and 210 cities overall -- has emerged as a challenger to
the leading 38-GHz license-holder, WinStar Communications Inc., and to Teligent as one of
the three companies holding licenses that would allow them to move ahead of LMDS licensees
in the use of point-to-multipoint technology.

This new technology allows operators to deliver full-duplex
voice, data and video services, in ATM (asynchronous transfer mode) format, via
omnidirectional transmitters that provide coverage over four to six square miles of
territory. The advantage to doing this is that it avoids the costs of installing
high-speed wireline connections to accomplish comparable service capabilities.

WinStar, which is conducting a point-to-multipoint service
trial over two contiguous cell sites in Washington, D.C., said last week that it will
begin testing a new RF system supplied by Hughes Network Systems, a unit of Hughes
Electronics Corp., in November, with plans to use the technology nationwide.

WinStar -- which holds an average of 750 MHz of spectrum
per market in the top 50 regions of the country -- reaffirmed its intentions to begin
commercial operations of point-to-multipoint systems in some markets this year. Officials,
however, have recently indicated that they remained uncertain about product-delivery dates
from vendors.

Teligent, too, is testing point-to-multipoint technology in
Los Angeles, and it is experimenting with different radio systems under a
systems-integration agreement with Nortel, spokesman Robert Stewart said.

There is one cloud over Teligent, however: Last week, House
Commerce Committee chairman Thomas Bliley (R-Va.) criticized a Federal Communications
Commission ruling that freed up more spectrum for the company.

"Our test in L.A. isn't really so much a test as
it is an ongoing effort to define our design parameters based on actual performance,"
Stewart said. "We've already demonstrated to our satisfaction that the
technology delivers what we need."

But while Teligent intends to launch commercial services in
10 markets this year, it remains to be seen whether point-to-multipoint technology will
figure prominently in the early rollouts.

"We'll probably do point- to-point applications
in areas [within a given market] where there are cost advantages to that approach, but
it's our intention to offer point-to-multipoint services, as well," Stewart
said.

Teligent recently gained some ground on the regulatory
front: The FCC ruled that it acted properly in shifting Teligent to the 24-GHz spectrum
tier from 18 GHz, granting it a fourfold increase in spectrum in the process. The
commission had come under pressure from the military to free up the 18-GHz tier in the
Denver and Washington, D.C., markets.

Several companies challenged the March 1997 order
implementing the spectrum shift, which triggered the FCC's reconsideration.

But Bliley -- who questioned the FCC's handling of the
Teligent matter earlier this year -- remained skeptical that the commission acted properly
in expanding Teligent's spectrum allocation to an average of 300 MHz to 400 MHz in 30
major markets without putting the matter out for public comment.

Bliley, in a letter sent to FCC chairman William Kennard
July 28, blasted the commission, contending that it appeared to have
"manufactured" the national-security rationale that it used as part of a
backroom effort to resolve a spectrum dispute between Teligent and Teledesic Corp., the
broadband-satellite company founded by cellular-phone pioneer Craig McCaw and Microsoft
Corp. chairman Bill Gates.

Bliley said he had documents showing that the White House
and commission officials threatened to open the spectrum question to a public proceeding
if parties to the proposed deal did not accept it. Such a threat would indicate that the
FCC considered a public proceeding as feasible, despite its assertion that avoiding such a
proceeding was mandated by military urgency, Bliley said.

"I am troubled by the commission's apparent
attempt to manufacture a national-security rationale in order to justify bypassing
traditional notice-and-comment rulemaking, as well as by the utter lack of accountability
by the commission's personnel with respect to this important procedural
decision," Bliley said in his letter.

"Moreover, I am concerned that the FCC may consider
its legal obligation to consider the views of the public in making regulatory decisions as
nothing more than leverage to be used against private parties in order to achieve a
desired outcome," he added.

FCC sources said Kennard had not responded to the Bliley
letter. With the summer Congressional recess looming, sources on Capitol Hill suggested
that further action in the matter would be delayed until September.

While Bliley made it clear that he was not threatening to
undo the spectrum allocation to Teligent, the information turned up in his probe could
prove to be valuable to any of the parties to the matter that might want to pursue it
further, either at the FCC or in the courts, said one source who is a participant in the
dispute.

"What you have here is pretty significant stuff if
there are e-mails and memos backing up Bliley's assertions," said the source,
asking not to be named.

Spokesmen for BellSouth Corp., DirecTv Inc.'s DirecTv
Enterprises Inc. unit and the Millimeter Wave Carrier Association -- all of which sought
the FCC reconsideration of the Teligent allocation -- said these entities were still
studying the ruling, and they were not prepared to say what, if any, further action they
might take.

"From a legal perspective, we still see problems with
what they did," said an attorney for one of the parties, asking not to be named.

Further clouding the wireless-broadband scenario is the
pace of licensing of LMDS auction winners at the FCC.

So far, the commission has granted licenses representing
479 of 864 winning bids -- including the 150-MHz B-block segment, as well as the 1.15-GHz
A-block segment -- said an FCC official, who requested anonymity.

But many of the more important licenses -- including those
of the leading bidder, WNP Communications Inc. -- are still on hold, pending completion of
the application-review process, the official added.

The commission hopes to complete the licensing process this
summer, but it could take longer, the FCC official said.

"These things sometimes have a way of taking longer
than you'd like," he noted.

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