Wireless Spectrum Gets Broadband Interest
Cable World
June 7, 1999
By Joshua Cho
Telecommunications companies last week jumped on the wireless bandwagon with
MCI Worldcom Inc., Qwest Communications International Inc., Microsoft Corp. and
John Malone's Liberty Media Group, all making investments in companies that work
with wireless spectrum, which could be used to offer a number of different broadband
services to customers.
MCI Worldcom said that it would pay $1.8 billion in stock and debt for paging
company SkyTel Communications Inc.
At an analysts meeting to discuss the acquisition, MCI CEO Bernard Ebbers said, "It's
a great opportunity for us. It's a foundation to deploy other wireless services."
The acquisition follows on roughly $200 million of unconfirmed investments by MCI in
the incongruously named wireless cable operators CAI Wireless Systems Inc., People's Choice TV Corp., Wireless One Inc. and CS Wireless Systems Inc., which have all filed for bankruptcy protection.
In yet another deal, Qwest Communications and a group of high-tech investment funds
said last week that they would pump $251 million into Advanced Radio Telecom
(ART) Corp. - a wireless broadband Internet service provider - to help accelerate the
deployment of ART's high-speed wireless network.
As part of that deal, ART will provide Qwest with broadband local wireless capacity
and Qwest will be ART's exclusive provider of network backbone. ART currently
offers wireless Internet services to businesses in Seattle, Portland, Ore., and Phoenix,
metropolitan areas.
ART plans to build wireless high-speed networks in 40 of the top 50 metropolitan-area markets over the next two years. Combined with Qwest's network, the companies say they'll be able to provide broadband services to over half of all U.S. businesses.
Another wireless broadband provider, Reston, Va.-based Nextel Communications
Inc., said last week that it had received a $600 million investment from Microsoft,
which represents a 4.25% stake in the company. Nextel said it would use the money to
advance the deployment of Nextel Online, a wireless Internet service. The company
also said it would develop additional unspecified services and expand its presence in
other countries where it operates, including Canada, Mexico, Argentina, Brazil and
Japan.
Also last week, Liberty said it was buying The Associated Group Inc., which has
interest in communications-related businesses, including a 41% stake in broadband
wireless services provider Teligent Inc., among other businesses.
In a prepared statement, Liberty president/CEO Robert Bennett said, "The Associated
transaction is a unique opportunity for Liberty. It allows us to obtain an attractive
investment in the very exciting and rapidly growing business of Teligent."
Analysts had mixed reactions to the current interest in wireless spectrum.
"These companies recognize that the wireless spectrum for the last mile has a place in
the future," said Bank of America LLC telecommunications service analyst Rex
Mitchell. "I think it's happening now but like any other evolving technology, it's not
going to happen overnight."
But some analysts, like Legg Mason Precursor Group's Scott Cleland, saw the wireless plays as strategic moves.
"This is more about warehousing spectrum for the future than it is a signal that fixed
wireless is going to take off in the near future," Cleland said. "It's a wise strategic move
to keep your options open. When good real estate opens up, you grab it."
But Bank of America's Mitchell said he sees the wireless spectrum helping
telecommunications companies to expand their respective footprints at a lower cost
than with land-based technology. One niche that Mitchell sees wireless spectrum filling
is in the "donut" surrounding metropolitan areas.
"If MCI has a footprint of fiber facilities in a certain geographic area, it's cheaper to
extend that footprint with wireless than with fiber," Mitchell said.
MCI said last week that it would use a combination of high-speed, copper phone
line-based DSL technology, wireless and MMDS satellite technology in order to offer
bundled long-distance and local telephone along with high-speed Internet access,
similar to what AT&T Corp. plans to offer through the coaxial cable infrastructure of
the former Tele-Communications Inc., and potentially MediaOne Group Inc., systems.
(June 7, 1999)
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