Sometimes it's right under your nose. Everyone is talking about 3G and the broadband wireless future, but little is written about some big players that are already rolling out broadband wireless services in several markets in the U.S. alone. Known traditionally as "multi-channel multipoint distribution service" (MMDS), this somewhat misunderstood technology is undergoing a renaissance of sorts.
In several US markets, including Phoenix, Chicago, and San Francisco, carriers are deploying broadband wireless networks that can reach incredible speeds of nine megabits per second under optimal conditions (theoretically, of course).
It's being marketed to both consumers and businesses. And it has the potential of giving consumers a choice beyond the duopoly of cable modem and digital subscriber line services now available (in many areas, only one or neither of those services is even offered).
What is it?
Of course, MMDS is fixed wireless, meaning it can't currently facilitate super-fast Web phones or other mobile services. At least not yet. But even that is changing. New equipment is turning this fixed wireless technology into at least a portable if not mobile service.
Within a couple of years, experts say that an MMDS user may be able to pack up their laptop and a small antenna and set-up shop at a local Starbucks - all while enjoying the same multi-megabit speeds they get at home using the same technology.
The service wouldn't work while the user was walking around or driving, but it would give mobile sales forces and other such folks a way to instantly set up a high-speed, Internet-enabled presentation at a stationary location on the road. For this and other reasons, MMDS proponents are seeing dollar signs.
Like LMDS and several wireless services that operate in unlicensed spectrum bands, MMDS operates on the same principles of those other fixed wireless systems. But unlike those services, MMDS has one key advantage: It operates in bands from 2.15 GHz to 2.65 GHz, which is relatively low on the spectrum and therefore enables signals to travel great distances (LMDS, by comparison, operates in higher frequencies, requiring more base stations to achieve broad coverage). In addition, MMDS's low placement also makes it possible to transition to a broadband mobile technology someday (if the Federal Communications Commission allows it).
In fact, the administration of former U.S. President Bill Clinton has already proposed using the MMDS band as a 3G band (and displacing current licensees). The MMDS industry opposes the idea because it would displace current licensees.
Still, several major backers have placed bets on the service in the last couple of years, most notably Sprint and Worldcom, which together have spent a little over $2 billion buying up MMDS spectrum licenses and assets since the FCC authorized use of the band for two-way data in 1998. That ruling, more than any other factor, helped turn MMDS from a second-rate analog video service into what could become a blazing broadband competitor.
In fact, MMDS systems originally cropped up decades ago as an alternative to the nascent cable TV industry (they used to go by the oxymoronic moniker of "wireless cable"). But by the mid-1990s, new pizza-sized satellite dishes from the likes of DirecTV and EchoStar took over rural America. MMDS operators, most of whom offered only 30 or 40 channels, simply couldn't compete with their 150-channel, digital offerings.
The FCC's decision to free up the MMDS spectrum for broadband data was a direct result of lobbying by operators fearing obsolescence. But by the time the FCC acted in 1998, the entire industry was teetering on bankruptcy. And that's when Sprint and Worldcom moved in, buying up well-positioned MMDS operators on the cheap. It wasn't long before Sprint and Worldcom announced a merger. While most of the deal was focused on combining other telephony assets, a big part of the synergy involved wireless strategy.
The idea was to combine the MMDS systems both had purchased into one massive, nationwide network. It was a perfect match: Worldcom had more licenses but no real wireless infrastructure; Sprint, on the other hand, had a nationwide network of PCS towers onto which it could graft MMDS data equipment. But it was not to be. The Justice Department sued to squash the merger in January of 2000; Sprint and Worldcom abandoned the deal within weeks.
Since then, MMDS fell off the mainstream radar screen. Many broadband competitors such as cable and telephone companies have openly wondered whether the buzz about MMDS that briefly accompanied the merger was dying out. Would Sprint and Worldcom still pursue MMDS strategies separately? Did the economics still work? Judging from recent events, the answer appears to be yes. "As we look to the future, the operational side of the business drops to almost zero," notes Joe Brooks, vice president of sales and market development at Worldcom Broadband Solutions.
The reason Brooks and others believe costs are falling so fast revolves around new technology that increases coverage areas in most markets and enables cheap, self-installation. Without expensive truck rolls to install equipment for businesses and consumers, MMDS operators hope that they will be able to offer price parity (or even cheaper service) than cable modem and DSL services. Among vendors working on so-called "non-line-of-sight" wares are Cisco, Lucent, and Nortel, among others.
Still making advances
The biggest buzz surrounds variations of an algorithm scheme known as "orthogonal frequency division multiplexing" (OFDM), which helps increase the penetration of MMDS signals. In many cases, it's the difference between a user needing a rooftop antenna and direct line-of-sight, and simply placing an antenna on their desk by the window. Not only can such technology greatly reduce the cost per acquisition, but it can also help drive equipment into the retail marketplace.
"Weŭre looking at some type of OFDM down the road," says Brooks, who notes that OFDM equipment was initially too expensive to deploy. "But we know we can use it to cover an additional 10 to 30 percent of each market, and that will help offset costs." Brooks says he expects vendors to start offering subsidies and better prices on OFDM equipment by next year. "It will allow us to bounce signals off of trees and buildings," he says. "Will it eliminate [line-of-sight] problems entirely? Not initially. Not until you go to the cellular model."
Integration with the cellular infrastructure
The "cellularization" of MMDS networks - combined with OFDM technology - is a farther out goal, but could be another Holy Grail as these networks evolve. In Phoenix, where Sprint has signed up more than 10,000 broadband wireless customers, the company has already "sectorized" its network by installing another base station to augment its existing tower (Traditionally, MMDS systems were built on the one-way broadcast model: One big tower placed on a high-altitude structure). But with sectorization, MMDS operators seek to create segments of the market that would be served by separate base station transmitters.
Eventually, that would evolve into a cellular model in which several base stations created separate "cells" all over a local region. Such a network will be able to accommodate portable devices, although most say a mobile service is many years off if it's ever adopted at all. "It's much more of a portable service than a mobile service," Brooks says. "It's not going to replace Sprint PCS."
And while the Sprint-Worldcom merger didn't work out, that doesn't rule out other consolidation. For one thing, Sprint and Worldcom could create a separate joint venture to combine their MMDS assets (although neither side has publicly suggested such a move). In addition, LMDS players seeking the advantages of the lower MMDS spectrum while capitalizing on the greater capacity generally allocated in the upper bands could combine with their MMDS cousins (and vice versa).
While such consolidation would present a host of equipment issues, most notably the expense of building receiver equipment that could accommodate several fixed wireless bands, the idea that the fixed wireless industry could consolidate in the next few years isn't exactly out of the realm of possibility. "It's not a real leap to make," admits Peter Yarich, director of global broadband research at the Strategis Group. "There could be synergies [between LMDS and MMDS players]. It's not that unlikely." Strategis Group predicts almost 5.5 million fixed wireless users by 2005.
The future is still wide open
Fixed wireless - and especially MMDS - may be positioned for growth, but that doesn't mean the industry doesn't face serious challenges. They range from the complex (perfecting OFDM and other new equipment, working out interference issues, etc.) to the rather mundane, such as getting local approvals for tower siting.
"Forget about 'not in my backyard,'" notes municipal consultant Jonathan Kramer, who advises cities on tower siting issues and has noticed increasingly defiant attitudes from local residents. "How about, 'not on the planet Earth'?" He says Sprint is in an "excellent position," however, because it already has so many PCS towers.
All of this is not to mention the presence of "instructional television fixed service" (ITFS) licensees who have rights to portions of the MMDS bands for non-profit uses. MMDS operators must work with them to minimize interference issues, among other things - an often complicated endeavor that licensees in other wireless bands don't face.
Of course, with big players like Sprint and Worldcom now fully behind MMDS deployments - along with the seemingly insatiable appetite among businesses and consumers for broadband capacity - the game may be theirs to lose.
In the mean time, the public can expect to hear more about MMDS in the coming months and years.
It doesn't mean that this is broadband salvation. But the MMDS industry doesn't appear to be backing off of its quest to become a major broadband player going forward.
Michael Grebb has previously written for The Industry Standard, Business 2.0, and eCompany. From Washington DC, he covers the impact of mobile technology on modern society.