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Almost like Moore's Law, as the market for telecommunications grows, the number of broadband access solutions seems to double. So far the battle has largely been between cable modems and xDSL. Yet from the shadows, MMDS, LMDS, Ka-Band satellite and other wireless technologies have begun to deploy broadband systems claiming to offer bandwidths greater than 1 Mb/s.

Broadband wireline technologies are currently ahead in deploying services. Cable modems will have an estimated 14 million global subscribers by 2002 and DSL will have about 10 million. Satellites on the other hand have been slow to market and have planned to offer a one-way solution that may be inefficient for Internet applications. High frequency wireless as well has its limits with line of site and rain fade/weather issues.

Those in the wireless and satellite business hope to change the situation by making their solutions competitive with wireline. At the recent WCA (Wireless Communication Association International) and Satellites and the Internet '99 conferences, providers like Intelsat boasted rapid implementation, the ability to provide backbone capacity to areas un-served or under-served by cable, and high-speed data rates as proof of their abilities.

At the WCA conference, MMDS providers praised the FCC for its adoption of the reconsideration for two-way services in the MMDS spectrum allowing them to offer interactive services to customers across the United States. (This rulemaking Docket No. 97-217 (Report No. 99-7) will be available to the public in the near future). MMDS services operated in the 1.9 to 2.7 GHz range and provide up to 33 channels. A second band, 27.5 to 29.5 GHz is also available, providing up to 49 channels.

They also expressed hope in another proceeding, a Notice of Proposed Rulemaking (NPRM) and Notice of Inquiry involving subscriber premises receptions and access rights to buildings for fixed wireless access (June 10th - Docket No. 99-141) that would allow providers to place antennas on, or cables in, multiple dwelling units (MDUs).

In the United Sates approximately 28% of all housing units are located in MDUs. In addition, many businesses are located in multiple tenant environments. Therefore access by competing telecommunications service providers is critical to the successful development of competition in local markets.

In order to provide services to these types of establishments, telecommunications carriers must access the facilities within the building or across the landowner's premises in order to transport their signals. The carrier can either install its own equipment on the premises or obtain access to existing facilities to achieve this.

In either situation, carriers have testified that both building owners and incumbent LECs have obstructed reasonable access with non-/recurring fees, per linear foot basis charges, and a variety of other charges that are not based on their costs and are may not be imposed on incumbent carriers.

At this point the FCC is seeking comments from competing providers on their preferred engineering arrangements within MDUs and on several requirements under consideration at the FCC for incumbent LECs including a provision that forces LECs to provide cable television systems and telecommunication carriers with nondiscriminatory access to any pole, duct, conduit or right of way they own/control. Also included in the comments is a Winstar petition asking for rooftop access for microwave communication. Comments are due August 13th and replies will be made by September 3rd.

The specific applications resulting from these FCC decisions varied by provider although the general consensus was that residential areas not covered by broadband services and small to medium sized businesses (SMEs) were the target market for MMDS and LMDS. Attendees also agreed that most markets could not be covered by wireless alone, but would end up having a "basket of technologies" combining DSL, cable, and wireless to offer the best solutions for the consumer.

Currently, the active players in this market are small companies like Spike Technologies and SpeedChoice (described in WAVE #9076) who provide small businesses and consumers Internet access, high-speed video and data. As the market grows however, this may change. Sprint has decided to enter the market by acquiring Videotron USA, Transworld Telecommunications, People's Choice Television, American Telecasting, Inc. and is finalizing the acquisition of SpeedChoice (The Board of Directors and Shareholders of both companies have approved the deal yet it must still get FCC approval which is expected in August/early September before it can proceed with the official transfer of MMDS licenses).

MCIWorldCom will also become an MMDS competitor by acquiring cable television company CAI Wireless Corp and Prime Cable as well as spectrum in the MMDS market which will allow the company to reach 50% of the consumers in the United States.

At the Satellites and the Internet conference speakers predicted growth in the global satellite industry from $2 billion in 1999 to almost $20 billion in 2004 (including VSAT, Internet, and broadband).

The keyword at this conference was cache - pushing popular content closer to the user to reduce the load on servers and lower transmission cost. Irwin Communications estimated that the United States backbone provides 80% of Internet content. Consequently, their prediction was that providing Internet backbone access for ISPs, and caching and multicasting content for regions outside the United States would offer market potential for satellite companies.

On the multicasting side, Pioneer Consulting estimated that the market, would consist of mostly small and medium size businesses (SMEs). According to Pioneer there are about 7 million SMEs in the United States with 3.2 million involved in information intensive markets. Subscribers in this market were predicted to increase from 2,000 in 1998 to 647,000 in 2007 with revenues at about $6.61 billion.

One-way satellite providers like DirecTV and DirecPC have had the most visibility so far in the market. Their services, broadcast content to users for between $20-80 per month. DirecTV offers more than 210 channels sent to users via an 18-inch receiver placed on the consumer's roof while DirecPC offers 400kbps downloads of websites, broadcasts and usegroups. These systems have had relative success, but are not suited for two-way interactive Internet applications.

Other companies like Intelsat are testing multicast-to-cache systems (their system is called IDS - Internet Distribution System) to be used by kiosk sites (ISPs) to provide international connectivity. The system, and others like it, will allow the ISP to maximize their bandwidth use, while decreasing Internet user response times which will provide cost savings to both the ISP and consumer.

In the future players like Spaceway (online in the United States in 2001 and worldwide in 2003) will offer two-way Internet services at T1 prices (according to estimates) although with the way cable modem and DSL prices are dropping, it may be difficult for satellites to compete in developed countries that have wireline infrastructure available.

WAVE Comments

Satellites offer a high-speed way to receive data broadcasts using caching and point-to-multipoint techniques to push data to the consumer. One question at the Satellites conference questioned the ability of the satellite services to be competitive when broadband wired access falls below the $200 price level. Currently satellite services are one-way, using dial-up for the return path. Systems like Spaceway, which could offer two-way services are years from market release. Cable modems will have the advantage of being a quick to market, low cost solution. How will satellites compete? This is an interesting question that conference attendees quickly dismissed with the pretence of taking the conversation offline and giving others an opportunity to ask questions.

Even Nicholas Negroponte, who gave a keynote at the conference, challenged the satellite providers to compete with traditional wireline services by providing as close to symmetrical two-way services as possible, stating that once satellites could provide this service globally, systems with only a footprint would be at a severe disadvantage.

Researchers predict that less than 2% of Internet traffic worldwide is provided by satellite. They also predict that only 2-3 Ka band systems will survive the telecommunications market. We agree with these estimates and predict an uphill battle for these types of satellite services - time to market and cost of service being the prohibiting factor to consumer and remote regions.

MMDS on the other hand offers possibilities for consumers that DSL and cable modems have not. Rollouts have proved that the technology is reliable, affordable and therefore a good alternative to wireline services. The main limitation on this market, in our mind, is that the market is slowly being taken over by MCIWorldCom and Sprint. If these two powerhouses absorb all providers, a monopoly situation may develop that raises prices. This will be their downfall in this competitive marketplace.

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Page updated 1/24/07
Copyright 4th Wave Inc, 2007