Wireless Broadband Faces Obstacles

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Wireless-broadband technology has taken the first tentative
steps toward commercial deployment, but it appears to be at least nine months away from
even limited deployment.

A handful of initial trials of the next-generation
point-to-multipoint gear have generally met expectations with the delivery of video, data
and voice services in real operating environments to nonpaying customers.

But, contrary to some vendor and operator claims,
participants in these trials said technical refinements must be made before key components
and systems can be manufactured on a mass scale. Most of these adjustments are related to
implementing over-the-air ATM (asynchronous transfer mode) technology.

Moreover, the advanced-service capabilities of the new
wireless-broadband systems pose a significant marketing challenge: Providers must figure
out how to package and bill for these capabilities in a way that is not too disruptive to
the traditional modes of telecommunications administration in the business world.

"We in the telecommunications industry have waited a
long time to be able to offer services based on dynamic assignment of bandwidth-on-demand,
but, now that we can, we have to figure out what the product is," said David
Ackerman, executive vice president of WinStar Communications Inc.

WinStar has developed an operating-support system capable
of billing for "bits-on-demand," which would permit unusual flexibility and
oversight in the administration of telecommunications services. But 90 percent of the
company's customers have shown that they don't want that type of billing system,
Ackerman said.

"They're looking for a way to measure the cost
savings that we offer against the costs that they're accustomed to seeing, which
means that we have to integrate our services in a way that more closely fits the
traditional mold," he added.

WinStar has positioned itself to move aggressively into
point-to-multipoint wireless service with the completion of a technical trial in Florida
over the winter and the launch of a more ambitious trial involving the delivery of
services to several businesses in Washington, D.C.

The two-transmitter system in Washington, D.C., makes use
of ATM over-the-air interfaces to deliver a full slate of broadband services over multiple
channels operating at up to 155 megabits per second to each of four buildings on a
bandwidth-on-demand basis, officials said. Nortel supplies the radio technology, and
Siemens Telecom the telecommunications components.

But Ackerman made it clear that the trial, which will soon
add a third transmitter and more buildings, is not using production-ready,
commercial-grade equipment.

"The availability of equipment will be a gating factor
in our plans to move ahead with commercial deployment," he said, declining to
elaborate.

Ackerman noted that when he suggested at a recent
conference that WinStar would be ready as early as June to move ahead with commercial
deployments, representatives from four vendors appearing with him in a panel discussion
said, in effect, "Not a chance."

Ackerman added, "Anyone who says that they're
ready to supply equipment now is misleading you."

WinStar, with large blocks of spectrum in the 38-gigahertz
tier in more than 160 markets nationwide, was the top bidder for eight A-block (1.15-GHz)
licenses and seven B-block (150-megahertz) licenses in the recently concluded LMDS (local
multipoint distribution service) auction. That brought its total average spectrum holdings
to more than 750 MHz in the top 30 markets and to approximately 740 MHz in the top 50
markets.

The company will begin commercial deployments of
point-to-multipoint systems in two unspecified markets -- one on the East Coast and one on
the West Coast -- and then expand from there, using its existing hub sites nationwide at
first, then adding more as it goes along, Ackerman said.

The company -- which is now delivering switched services in
21 markets, and which intends to bring that number to 30 by year's end -- anticipates
that it can deliver broadband services to hundreds of buildings housing small and large
businesses from each hub transmitter, said Frank Jepson, senior vice president for
capital-market relations at WinStar.

"In the largest markets, we believe that we'll be
able to hit all of the targeted buildings with no more than 12 hub sites," he added.

The Florida test, demonstrating performance under severe
weather conditions, proved that the wireless-broadband technology can meet the
specifications set by WinStar for point-to-multipoint services, including 99.999 percent
reliability and 10-13 bit-error-rate parameters, Jepson said.

"We wouldn't have moved to the next trial stage
if the technology had not met those requirements," he added.

Bell Communications Research, in a recently issued report
on wireless-broadband performance, said equipment operating at the 28-GHz and 31-GHz tiers
of LMDS could be expected to reach 70 percent of the market in urban areas and 60 percent
in suburban and rural areas.

The report found that services over LMDS networks could be
provided "more economically than other broadband-access alternatives."

Demonstrating the validity of these assertions is a primary
goal of another wireless-broadband trial that just got under way, this one involving the
use of LMDS equipment supplied by Bosch Telecom Inc. in Dallas. "The biggest barrier
to acceptance of this technology has been the lack of a viable demonstration of its
capabilities that a large segment of the market can witness firsthand," said Ed
Cantwell, president and CEO of Bosch. "We think that this is going to turn a lot of
heads."

Bosch is using two transmitter towers to demonstrate the
viability of LMDS, with close to 100 users in 18 business and apartment buildings
participating in the trial.

The showcase also includes six different simulated market
environments, with a wide range of service applications matched to specific needs.

Bosch will soon add an ATM component to the trial, bringing
the equipment into conformity with the commercial system that it intends to begin
supplying by sometime this fall, Cantwell said. While he said that the company would be in
position to deliver gear within an order cycle of receiving big orders, he asserted that
the operating community is not yet ready to move ahead on a large scale. So far,
Bosch's only orders are for four beta-tests scheduled here and abroad by its
customers toward the end of this year, he noted.

Teligent Inc. -- which is vying with WinStar to be first to
market with point-to-multipoint gear in the United States, using its spectrum base at 24
GHz -- has said that it will deploy systems in 10 cities this year: Austin, Texas;
Chicago; Dallas; Denver; Houston; Los Angeles; Orlando, Fla.; San Antonio; Tampa, Fla.;
and Washington, D.C.

But while the firm recently completed its first call over
the wireless-broadband system supplied by Nortel, it is just now getting under way with a
beta-test using a preproduction version of the system in Los Angeles.

It, like WinStar, must wait for a more advanced system
before moving to commercial deployments, officials said.

The biggest holdup in wireless-broadband-equipment
production appears to be uncertainty over ATM, which requires the development of new
standards for over-the-air applications. So far, all of the systems have been using
proprietary implementations of ATM, but some are beginning to add the still-incomplete
specifications being developed within the International Standards Organization's
DAVIC (Digital Audio/Video Interactive Communications) process.

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