IBD article on WCOM-Sprint wireless plans
Sprint Tapping Wireless Cable For Net Play It's buying companies on the cheap in bid to provide wireless Web access - so are MCI WorldCom, BellSouth
Date: 10/5/99 -- Author: Reinhardt Krause
There's more than one wireless match between MCI WorldCom Inc. and Sprint Corp. Merging the two companies would give MCI a thriving digital mobile phone service, Sprint PCS. And both firms also are targeting broadband wireless.
Both MCI and Sprint in recent months have acquired struggling firms whose plans to bring cable TV broadcasts to homes via wireless technology never panned out. MCI and Sprint hope to use this high-frequency radio spectrum to bring fast, wireless Net access -rather than soap operas -to homes.
With two purchases complete and three more in the works, Sprint will own spectrum that reaches about 30 million homes, mostly in Midwest and West Coast markets. MCI, meanwhile, has acquired two firms with spectrum mostly in the Northeast U.S.
Those deals would make a nice match, should the Nos. 2 and 3 long-distance phone companies combine, analysts say.
Both Sprint and MCI have bought, or are acquiring, the wireless cable firms relatively cheaply. Their strategy: Buy it cheap, fix it up and show it off.
That strategy works for homes and cars. It will work for Internet access, too, says Timothy Sutton, president of Sprint's broadband wireless group.
''The fact that we were able to get the spectrum inexpensively helps us,'' he said. ''The fact these were companies pursuing a flawed TV business model doesn't change the spectrum's value. We have a lot of work to do, but we think we'll move into markets early next year.''
Interviewed last week, he wouldn't comment on talks between MCI and Sprint.
Spending $1 Billion-Plus
Sprint is spending more than $1.1 billion this year to buy wireless cable firms. But it still must spend hundreds of millions to build out its broadband wireless network. Like MCI, Sprint plans to use the wireless spectrum to compete with the regional Bells in local phone markets.
Sprint last month bought People's Choice TV Corp. and American Telecasting Inc. It's in the process of buying three other little-known wireless cable firms: Videotron USA, Transworld Telecommunications Inc. and WBS America Inc.
This summer, MCI WorldCom bought CAI Wireless Inc., which has dipped in and out of Chapter 11 bankruptcy, and Wireless One Inc., which also had filed for bankruptcy.
Most of these wireless cable firms had bid, and won, their spectrum licenses in the early 1990s. But they struggled to make money, and more than a dozen firms consolidated over recent years. At least one potential plum still is available: Nucentrix Broadband Networks Inc., formerly Heartland Wireless Communications Inc.
To compete with cable firms, some phone companies acquired wireless cable licenses, too. Among them, only BellSouth Corp., which has jumped into the bidding for Sprint ee related story, this page), is marketing the technology, in markets such as New Orleans and Atlanta.
As early as 1996, People's Choice and American Telecasting
tested high- speed Internet access over their spectrum. Like the other small wireless cable firms, they didn't get far.
''They had some good spectrum, but as small operators they just didn't have the resources to build the network correctly,'' Sprint's Sutton said. ''We do.'' He adds that Sprint has a track record in launching a digital mobile phone service.
Both Sprint and MCI WorldCom have plenty of equipment suppliers to choose from.
Lucent Technologies Inc. and Northern Telecom Ltd. supply broadband wireless gear. Cisco Systems Inc. and Motorola Inc. are partnering in wireless networks. Other suppliers include California Amplifier Inc.
To get Net access, wireless users buy pizza-box-sized antennas that attach to the side of houses or go on roofs. The receivers get signals from antenna towers located up to 12 miles away.
While the technology works best with a clear line-of-sight between antennas, Sutton says Sprint's network will tolerate hills and trees.
Wireless cable spectrum works similar to another wireless technology, also broadband but on a different spectrum, used by start-ups such as WinStar Communications Inc., Teligent Inc. and Nextlink Communications Inc.
Those networks have more capacity and are better suited for the needs of small and midsize businesses, analysts say.
Some rivals say Sprint and MCI WorldCom are late to market with an inferior technology.
''It's a residential play,'' said Gerard Salemme, senior vice president for external affairs at Nextlink. ''Can (they) pull it together - yes. But it's not a slam dunk. If I had nothing else, I would try it, too.''
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