Wireless Operators Reinvent Industry with Data

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The wireless-cable industry is banking on data-delivery
services to breathe new life into its business.

So important are new applications like high-speed Internet
and voice telephony to the industry that its top trade group, formerly the Wireless Cable
Association, recently renamed itself the Wireless Communications Association International
(WCA).

Andrew Kreig, president of the WCA, said the recently
announced merger between AT&T Corp. and Tele-Communications Inc. emphasized the
importance of broadband in the home, adding that the wireless-communications industry has
"more immediate applications for consumers."

Whether wireless operators use their spectrum for video,
data, telephony or some combination of the three will depend on the market conditions of
individual territories, Kreig said.

Michael Whalen, vice president of finance and acquisitions
for MMDS operator People's Choice TV Corp. (PCTV), said data is "a completely
different market" than video. Cable and direct-broadcast satellite offer entrenched
competition. But because the data market is growing exponentially, it's easier to get
that business than to try to gain market share in a mature industry, he said.

PCTV commercially launched asymmetrical high-speed-data
services in Detroit and Phoenix, with plans to add Chicago later this year. The company
also has permanent authority to operate a two-way service in Phoenix.

"The highest and best use of our service is
multimedia, with an emphasis on two-way data and two-way voice access," said David
Sentman, senior vice president and chief financial officer at American Telecasting Inc.,
another struggling wireless-video operator.

"We feel so strongly about two-way services that
we've cut back on analog-video-subscriber growth," Sentman said.

He added that the company is not abandoning video
altogether, because it still generates revenues. "That's what pays the bills
today," he said.

ATI is seeking strategic partners to help further its move
to data, voice and Internet delivery.

"We're looking for telecommunications partners
that would benefit from wireless local loop -- the last mile to the home," Sentman
said.

In the meantime, ATI started the commercial rollout of its
"WantWeb" Internet-access service in Portland, Ore., and Denver and Colorado
Springs, Colo. The asymmetrical service -- much slower speeds upstream than downstream --
uses a telephone-return path.

In late June, Rocky Mountain Internet Inc. agreed to buy
the WantWeb service from ATI on a wholesale basis and to market it to its own customers.
ATI will continue to sell the service in Colorado Springs, as well.

In Eugene, Ore., and Seattle, ATI is trying out two-way
data and two-way, fixed, point-to-point telephony. It has not yet been commercially
deployed.

The industry had anticipated that the Federal
Communications Commission would give its thumbs-up for two-way wireless-data services in
time for the annual WCA trade show this week in Philadelphia. As it stands now, the FCC
has extended its comment period, and it may be another two months before the commission
issues a final ruling.

Kreig said the FCC wants to make sure that the public
interest is protected by ruling out possible interference problems with the spectrum that
is used for the return path.

Not all wireless-cable operators have an immediate need for
wireless-data services. Pacific Bell Video Services, for example, is affiliated with
regional Bell operating company SBC Communications Inc., which offers a number of its own
high-speed Internet services, using technologies such as ADSL (asymmetrical digital
subscriber line), ISDN (integrated services digital network) and T-3 lines.

"Because SBC has its own Internet product, we
wouldn't take business away from them," said Julie Dodd-Thomas, executive
director of external and regulatory affairs at PBVS.

She added that the Los Angeles basin, where the
digital-wireless service is offered, is so large that the company would have to give up
bandwidth devoted to its video product in order to serve everyone who wanted Internet
access.

"It's a marketing decision," Dodd-Thomas
said, adding that her company chose to focus on competition from direct-broadcast
satellite companies, which offer well over 100 video channels.

BellSouth Corp.'s BellSouth Entertainment continues to
monitor the industry's use of wireless spectrum for data, said its vice president,
John Hartman. "We have chosen at this point to dedicate the vast majority of our
spectrum to video," he added.

Hartman conceded that "data is going to be an
increasingly important component of any entertainment service to the home," but he
added that such data can be delivered through a number of technologies, and not just
wireless.

BellSouth currently offers its BellSouth.net
Internet-access service to its wireless-video customers in New Orleans and Atlanta.
Hartman said the services are not yet bundled together, although the company is looking at
doing so in the future.

Kreig said most wireless operators that offer data services
have already chosen to target commercial customers first, rather than residential
customers.

"The business market is extremely important,"
Kreig said. "You have both high demand and the ability to pay for it."

As with wireless cable, wireless-data services can't
serve everybody in any given market, due to line-of-sight constraints.

T. Lauriston Hardin, chairman and CEO of consultant company
Hardin & Associates Inc., said AT&T's deal with TCI isn't the key factor
pressuring the wireless-cable industry to push forward with two-way data services.

"The pressure is there whether or not the AT&T
deal is done," he said. "It's driven internally by their business
models."

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