[IDT Spectrum]
Level 3 adds to wave of new options for US wireless backhaul
By CAROLINE GABRIEL
Published: 27 October, 2009
Rethink Wireless
Tags >> Spectrum | US | Backhaul
rethink-wireless.com
Carriers round the world know that the demand for mobile broadband, and the increasingly dense networks being built for 3G and 4G, will put massive strain on backhaul capacity. In the US, this is driving a particularly dramatic change in backhaul habits, with operators following their European cousins towards greater use of microwave, while wholesalers see their opportunity to steal share from the incumbent telcos. Level 3 is the latest to jump, with a new service for cellcos in metro and rural areas, called Level 3 Tower Access.
The company has been offering wireless backhaul services for a decade but is now unleashing new services and more flexible options for carriers, to support the growth in their requirements. In the first phase, it hopes Level 3 Tower Access will tap into the wave of stimulus funded build-outs for underserved areas, which should start in 2010.
It will provide connectivity to its fiber network in unserved and underserved territories, offering cellcos the option to house their towers directly onto existing Level 3 network facilities. It says it already has over 300 'tower ready' cell sites that have the rights of way in place to support new towers. The wholesaler will partner with other providers to build towers on these locations, which will be carrier neutral. These shared infrastructure approaches, often with a wholesaler managing the whole shared system, are becoming increasingly popular in other parts of the world for the savings in cost and effort to the cellco. In the UK, British Telecom is providing a backhaul service over its IP-based 21CN network for most of the cellcos. Level 3 itself is taking on a similar offering from FiberTower.
Level 3 may also be looking to invest in more spectrum for microwave backhaul, to complement its fiber. In 2006 it bought TelCove, together with 300 licenses covering 90% of the US population, and is likely to try to augment its wireless capacity further. This could make it a candidate to acquire the wireless backhaul spectrum of IDT Spectrum, which put its assets up for sale recently.
IDT Spectrum bought up the licenses held by bankrupt broadband wireless operator Winstar for $42.5m at the end of 2001, still does not expect to get back the $300m it has spent trying to create its own national backhaul wholesale network. However, eyeing the interest in backhaul capacity from cellcos and cable operators, it has decided to sell up its portfolio, in a move that highlights the decade's corkscrew twists in the value and business models for high frequency spectrum, especially the LMDS band around 28GHz to 31GHz - the focus of an early broadband wireless access bubble around the turn of the century. This led to a wave of bankruptcies, and the discrediting of LMDS as an access band, but it has been gaining new value as a backhaul option with its high capacity, line of sight characteristics.
IDT bought Winstar, whose spectrum covered all 50 states and averaged 615MHz in the top 200 markets. It held 16 LMDS licenses and 931 licenses at 38GHz, for which Winstar had originally paid $200m at auction, and is particularly strong in some top cities like New York and Chicago. Now, its president Michael Rapaport believes wireless operators could see the licenses as useful assets and said recently that he was already receiving enquiries from large carriers before the decision to sell. "We have known for a long time that there's a tremendous need for our spectrum," he said in an interview. "It's a function of maximizing shareholder value." IDT Spectrum's original plan was to build a backhaul network, and it spent about $300m doing that before shifting to a less capex-intensive leasing model. "We were five or six years too early for the marketplace," Rapaport commented. He plans to sell the spectrum as a single nationwide bundle rather than market-by-market. |
