Ottawa opens up wireless market to large companies
Small licenced firms fail to deliver viable service
TYLER HAMILTON
Technology Reporter
Saturday, May 29, 1999
globe & mail
The federal government has opened the door for the entry of large telephone and cable firms into the emerging
market for high-speed wireless communications, after startup firms failed to create a viable commercial
service.
MaxLink Communications Inc. and WIC Connexus, a unit of WIC Western International
Communications Ltd., were granted exclusive licences in 1996 to provide a wireless service called local
multipoint communications services, or LMCS. Three years later, however, neither firm has delivered on the
government's expectations.
Industry Minister John Manley announced yesterday that a new set of licences -- this time to offer LMCS-like
services in a different radio frequency range -- will be open to all bidders in an October auction. It will be the
first "spectrum" auction ever held in Canada.
The new licences will be for blocks in the 24-gigahertz and 38-gigahertz frequency ranges. LMCS, by
comparison, operates in the 28-gigahertz range. The frequency ranges are like different colours in a rainbow,
with each colour able to carry large quantities of digital communications traffic through the air.
"The telecommunications industry is moving at a rapid pace," Mr. Manley said. "Providing easy access to
leading-edge wireless broadband telecommunications is a crucial step in our connectedness agenda."
Winning bidders of the new licences will be able to use the frequency to give Canadian businesses and homes
speedy access to the Internet and other communications services over a wireless link.
Telephone and cable companies also view the technology as a way to cost-effectively bridge gaps in their own
networks and bring high-speed digital service directly to a computer or television set -- an issue companies
such as BCE Inc. and BCT.Telus Communications Inc. will have to consider as they move on to each other's
turf.
The telephone companies applauded Industry Canada's announcement.
"It's a good policy in that it's not prohibiting Bell from participating in the broadband wireless auction," said
Martin Cullum, director of broadband business development at Bell Canada, a unit of BCE.
Neither the telephone or cable companies were allowed to participate in a similar licencing process in 1996,
when the government granted licences to provide much-hyped LMCS. Industry Canada excluded the big
communications carriers from entering the LMCS market to give small startup firms a chance to fairly
compete.
MaxLink and WIC Connexus were handpicked by Industry Canada to build what was promoted then as a
new lane on the information highway.
That lane, however, is still closed to traffic. Despite strong arguments from WIC Connexus and MaxLink to
delay the auctioning of more radio frequency -- and keep the telephone and cable companies out of their
market -- the government has decided to open the doors.
"Yes, we are disappointed," said Michael Connolly, director of spectrum management at Industry Canada.
"Clearly, at the time we launched the LMCS process, there were expectations. . . . Circumstances were such
that it just didn't happen."
Those circumstances were both economical and technical, analysts say. Few hardware companies were
making the network equipment for LMCS, partly because equipment makers were waiting for the much larger
U.S. market to licence and embrace the technology. Also, many companies that would use MaxLink or WIC
Connexus's LMCS network were concerned about the performance of the technology, and whether it was fit
for commercial services.
"MaxLink was just beginning to get its act together, so this makes their life more challenging than it needs to
be," said Iain Grant, a telecommunications analyst with Brockville, Ont.-based Yankee Group.
Nobody at MaxLink or WIC Connexus was available yesterday for comment.
MaxLink, which has placed a large equipment order with Newbridge Networks Corp. of Ottawa, has
maintained that Canadians will get LMCS.
"No one is in a mature state here, but we're quite happy," Joel Bell, president of MaxLink, said earlier this
year.
WIC Connexus, meanwhile, changed an order it placed with Newbridge and gave its business instead to
Cisco Systems Inc. of San Jose, Calif. As a result, the company is now involved in a lawsuit with Newbridge,
which claims Connexus broke its contract.
Industry Canada's decision to let the telephone and cable companies bid for frequency licences has drawn
concern from observers who say those firms will dominate the bidding process.
"The fact that the auctions are opened up to the telephone companies and cable companies means the deep
pockets win," Mr. Grant said.
In its announcement yesterday, Industry Canada also made it possible for cable and telephone firms to enter
the LMCS business by buying the licences from WIC Connexus or MaxLink.
Earl Hoeg, manager of wireless networks for the department, said all companies holding licences will be
subjected to strict "spectrum" caps and that any decision to transfer frequency between parties must be
reviewed and approved by Industry Canada.
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Of note to date nothing has come of the Newbridge suit of WIC. This may change the position of WIC. Can anyone tell me where Cisco is with regards to WIC.
Regards
Glenn |
