Wireless Cable Ops Still Upbeat

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Philadelphia -- Even with more bankruptcies hanging over
their heads, wireless cable operators encouraged each other last week with talk of new
business opportunities, and they called for cooperation in dealing with their problems.

At the annual Wireless Communications Association
International (WCA) show here, operators zeroed in on such concerns as program access,
demonstrating new technologies quickly enough to attract new financing and the cost of
digital set-top boxes.

WCA members congratulated themselves for surviving
difficult times, and they looked forward to better days ahead.

"Cloudy days are followed by sunshine," said
Henry Burkhalter, president and CEO of Wireless One Inc. "Stand by for more wireless
business opportunities in 1999."

CAI Wireless Systems Inc.'s reported plans to seek
Chapter 11 bankruptcy protection didn't seem to faze attendees (see story, page 54).

Advances in digital technology have created several new
opportunities for the wireless industry, including digital video and high-speed Internet
access, said Matthew Oristano, chairman and CEO of People's Choice TV Corp. (PCTV).

In the past year, a handful of companies have launched
their first digital-wireless-video services, which greatly expand the channel lineups that
an operator is able to offer.

In his keynote address last Thursday, William Reddersen,
BellSouth Corp.'s group president of value-added networks, outlined aggressive plans
for the telco's digital-wireless services in New Orleans and Atlanta. He predicted
that BellSouth would capture a 30 percent to 35 percent share of the cable market in both
cities within three to five years.

CS Wireless Systems Inc., which recently launched a
digital-wireless-video service in Dallas, has more modest market-penetration goals.

"Our goal is to get 10 percent of the market over five
to seven years," said Frank Hosea, senior vice president and chief operating officer
of CS Wireless.

The company is targeting per-subscriber revenue of $55 to
$65 in Dallas, where CS Wireless also offers high-speed Internet access.

While the WCA backs its members' moves to
data-communications delivery, not all attendees were convinced that it's a
financially sound business model.

"In switching from video to Internet-oriented
services, some of you may provide value to your customers," Reddersen said. "I
urge you to remember, however, that regardless of its growth potential, the Net is a very
crowded place and a very volatile market right now."

Reddersen warned that undercapitalized operators could lose
money rapidly if they use their spectrum for Internet access.

PCTV is backing its SpeedChoice high-speed service with a
staff of 75 people devoted to the Internet. The company is also establishing new
distribution channels for the service, including retail and value-added resellers.

Oristano said PCTV does not need a strategic partner to
help back its Internet-service launches.

"When you have a pie that's growing all of the
time, you don't have to focus always on taking business from a competitor,"
Oristano said.

He added that in some markets, PCTV is the only company
marketing high-speed Internet access to small businesses.

In the Phoenix market, where PCTV offers SpeedChoice to
consumers, the company has about 95 percent line-of-sight.

"Our competitors at the moment are anything but
ubiquitous," Oristano said of high-speed Web service.

Operators are looking toward wireless-broadband access,
which can be used for telephony. American Telecasting Inc. has already run two successful
WBA trials, said Robert Hostetler, ATI's president and CEO.

"Wireless-broadband access was just a thought a year
ago," he said, "just a hope." He added that ATI is now focusing most of its
efforts on WBA, and it is seeking strategic partners to help the company validate the
business model.

Still, lack of capital will continue to plague many MMDS
(multichannel multipoint distribution services) companies, executives conceded.

"The general challenge is to make sure that
there's enough money in the till to develop and demonstrate the new
technologies," Hostetler said. "Major funding comes then."

Reddersen warned WCA members not to wait too long to
deliver their new services and to start generating subscriber revenues.

"Spectrum with no customers ultimately has no
value," he said. "We must operationalize the spectrum or it will go away."

One of the biggest obstacles slowing down the migration to
digital-wireless video is the cost of the set-tops, especially considering the fact that
many customers require multiple receivers.

Hosea said two- or three-set-top homes could cost operators
$1,000, adding that he would be "real happy with set-top boxes at $200."

But an executive at General Instrument Corp. predicted that
GI's digital-wireless set-top "won't be breaking $200 for a long
time."

Perhaps more important to wireless operators than hardware
costs is fair access to programming.

"The number of digital channels means nothing if
there's no programming available to the viewer," Reddersen said. "Members
of the WCA must make it known to Washington [D.C.] that program access is the No. 1
video-related priority in our industry."

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