Xtract from broad based broadband article
fortune.com
Bill Esrey, not surprisingly, is an unabashed fan of wireless. The Sprint CEO oversaw the carrier's construction of a new, nationwide cellular network that has become the phone company's most prized asset. But on a sweltering summer day in late August, Esrey is sitting in his Westwood, Kan., office enthusiastically describing a different wireless: fixed wireless.
Using a swath of spectrum previously allocated for broadcast entertainment, Sprint has begun selling two-way broadband services in Phoenix and Tucson and it plans to be in 12 cities by the end of the year. The technology, multipoint multichannel distribution system, or MMDS, allows customers to send and receive fairly robust streams of data between a central broadcast tower and small antennas affixed to their homes. Information from the Internet flows across fiber to Sprint's local head end; from there it is routed--sometimes via fiber, sometimes via microwave--to the big central tower, where data are transmitted to the intended home antennas. A cable links the home antenna to a special modem for the service.
Esrey, a former investment banker, seems particularly pleased when he describes the economics of fixed wireless. Sprint was able to quietly snap up MMDS licenses covering about 30% of the country for about $1.2 billion. And once the company installs a central tower and high-powered computers in each market, it needs to spend capital only when a customer signs up. "We looked at all the models, and this seemed to us to be the most effective way to get to customers in the end," he says. Sanford C. Bernstein estimates that companies such as Sprint currently spend about $1,000 to add a new MMDS customer.
Esrey is so fond of MMDS that he would like to be able to roll it out in other cities. The problem is that WorldCom--which had to abort a proposed acquisition of Sprint when regulators balked at the No. 2 and No. 3 long-distance carriers' combining--controls licenses covering another third of the country. So even as AT&T has developed a residential fixed-wireless service to deliver broadband to customers beyond reach of its cable operation, Sprint has been forced to improvise by leasing DSL lines when its wireless signals fall short. That's a lot less attractive to Esrey because Sprint doesn't control those copper networks.
Of course, MMDS has its own challenges. The signal between the tower and the home antennas can't travel through or around buildings; even trees and hills can flummox the system. That is why Sprint is rolling out the service in flat cities such as Phoenix. Analysts also worry that the uplink channel isn't very wide right now. The consumer service downloads at up to two megabits per second but the upstream at around 256 K. And, like the cable system, wireless airwaves are a shared resource, and multiple users on the system can slow performance.
Esrey doesn't seem too worried about these issues. MMDS is so new that it could be a good long time before Sprint's local networks are strained for capacity. And when it comes to assessing the competition, Esrey is equally sanguine. A true wireless believer, he doesn't think cable and DSL will ever be a threat down the road. Rather, he thinks fiber will remain the main conduit for serving big business customers and for moving traffic across countries and under oceans. Consumers and small businesses will get their broadband via the airwaves. "Twenty-five years from now, you'll be left with two things," he predicts. "Fiber and wireless." |
