interesting......
LMDS Market Begins to Take Off
8/30/99 Fixed broadband services start to find their niche within the
wireless communications market.
By: Janine Sullivan, Contributing Writer
Contents
Finding a market niche
Standards and technologies
Marketing concerns
Global opportunities
At its initial introduction, Local Multipoint Distribution Service (LMDS) or Local
Multipoint Communication Systems (LMCS) was hailed as a “last-mile solution,”
particularly for US residential markets where this technology was seen as a
replacement to running cable to the home. Over the last year or so, however, the
technology has evolved into more of a niche market, finding its best chances of
success are delivering service to campus, multi-dwelling, and large urban
populations.
Overall, the market prospects for LMDS are promising. According to Allied
Business Intelligence's (ABI; Oyster Bay, NY) recent report Millimeter Wave
‘99—Broadband Wireless and Automotive Radar Markets, Opportunities and
Forecasts, total shipments of millimeter wave devices are expected to grow from
314,000 in 1999 to just under three million in 2004 while shipments of LMDS
customer premise equipment (CPE) are expected to grow from 1 to 14% of the
market across the same time period.
Fixed terrestrial wireless broadband technology is not necessarily new; it has
been deployed for years as a backhaul service in cellular networks. Operating
between 27 and 29 GHz, LMDS is a different application for fixed wireless service
that can offer legitimate fiber-like speeds and the ability to bundle voice and
high-speed data services, which is very valuable for business applications and is
becoming cost-effective in dense installations.
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Finding a market niche
Andy Fuertes, senior analyst at ABI, believes that one reason the LMDS industry
has backed away from residential market is the actual cost of service for each
premises. According to Fuertes, cost projections two to three years ago were
approximately $1500/premises—now projections for receiver costs are
approximately $5000.
“Overall, the LMDS market will be successful, but it is not going to match up to
original expectations for huge growth,” Fuertes says. “If providers concentrate and
go after the right sites, they can get a nice portion of the local services market,
perhaps as much as 5%, which could be very lucrative.” He expects that digital
subscriber line (DSL) and cable modems are probably going to enjoy the greatest
market share in delivering service to the US home, with other services such as
integrated services digital network (ISDN) and satellite networks taking a smaller
share.
Susan Welsh de Grimaldo, Manager of International Broadband and Internet
Publications at the Strategis Group (Washington DC) and co-author of the
company's recent report: World Wireless Broadband LMDS, MMDS, and
Broadband WLL, 1998-2008, agrees that LMDS is too costly for residential
applications. Welsh sees LMDS as fitting into an under-served global market
niche, offering real advantages for medium and small businesses that have not
had access to fiber (See Figure).
Global Forecast of Most Probable Wireless Broadband Service Revenues by Region, 2003 and
2008.
“There is definitely room for LMDS to develop market share alongside the big
players who are offering DSL service,” Welsh says, “The keys to success will be
in marketing strategies for operation and successful network design.”
Thomas van Overbeek, CEO of Wavtrace Inc. (Bellevue, WA), agrees that LMDS
has “essentially morphed into a data/voice broadband commercial medium over
the last year or so. It is especially targeted to businesses and multiple unit
dwellings.” The company, which developed the first point-to-multipoint
millimeter-wave radio system based on time division duplexing (TDD) has recently
formed a strategic alliance with Harris Corporation and has shipped some trial
systems to other customers. “The first LMDS operating systems are just being
deployed,” van Overbeek says. “In reality, LMDS is now just coming on line with
about 100 hubs in the world.”
“The market is rolling out as we expected and has recently taken off very rapidly,”
says Alain Broazeu, director of product management for Wireless Networks at
Newbridge Networks (Kanata, ON). “Overall, it took off a little later than originally
projected due to deployment delays resulting from auctions and telecom
evaluations and decisions. But, we are definitely on the tail end of that now, as
our customers are starting to roll out services and equipment.”
Newbridge supplies an LMDS network that consists of base station and customer
premise equipment (CPE) to telecommunications service providers. The company
has announced five LMDS wins for broadband network services in the US.
Broazeu notes that “the LMDS market is truly global in nature,” and points out
that Newbridge is supplying LMDS network solutions to Korea Telecom as well
as working with telecom providers in Sweden, France, Canada, and South
America.
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Standards and technologies
“One of the things that has slowed the LMDS market is a complete lack of
standards,” Fuertes says. This lack of standards hinders suppliers' abilities to
mass produce LMDS equipment, keeping costs high, which helps to give other
technologies like DSL and cable modems an edge in the residential market.
Another current issue for LMDS is which access technology to employ: time
division duplexing (TDD) or frequency division duplexing (FDD). Manufacturers of
LMDS systems differ on which method is best. Basically, TDD uses a shared
bandwidth that allows for upstream and downstream communications to occur on
a single channel while FDD requires two channels, one for upstream and one for
downstream, with a guardband between the two.
Due to the competing technologies, Fuertes is not optimistic about a quick
resolution to the standards issue, “Right now, manufacturers of LMDS systems
are more engaged in the technology race (FDD versus TDD) than the standards
issues. They seem to have less desire to resolve the standard issue right now.”
Newbridge Networks is one of the companies employing FDD technology in its
LMDS solution. Broazeu says that it “was the best choice for us. It is easier to
plan out a network because of specific upstream and downstream bandwidths.
The division in frequencies also makes it easier to avoid interfering bandwidths
when negotiating with other service providers across borders and service area
boundaries to avoid interfering bandwidths.”
Wavtrace has selected TDD for its systems because “it's the right, most efficient
technology for transmitting data,” van Overbeek says. “TDD is a proven
technology that is being used as the airlink in Europe's DECT system and
Japan's PHS system.”
Van Overbeek says that since data traffic is more than doubling each year and
voice traffic is growing 5 to 10% a year, it is likely that within a few years data will
be 80% of traffic. The engineers at Wavtrace feel that TDD is the most
appropriate access technology for data while FDD is particularly well suited for
switched circuit voice applications.
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Marketing concerns
Some of the biggest obstacles for LMDS to overcome may be marketing ones.
“One of the greatest challenges for LMDS success,” says van Overbeek, “is
convincing people that wireless is an alternative to ground infrastructure.” He
expects that the greatest marketing tool here will be proof of performance.
Another marketing challenge for LMDS is overcoming the perception of
performance problems. “Among those not familiar with the technology, I sense
that there is still concern that LMDS is not a reliable service,” Welsh says.
However, she points out that operators have had success setting up networks in
very heavy rain and have worked with equipment vendors to engineer systems
that handle the interference.
The experiences reported by Newbridge Networks while implementing a solution
for MaxLink, the Canadian LMDS operator, confirm this. “Our systems have been
running reliably through ice storms, hail, and thunderstorms.” The company's
equipment has been operational in the system for almost a year.
In pursuit of optimal LMDS performance, engineers at Andrew Corp. (Overland
Park, IL) have been working with system developers to overcome the
technological challenges that result from interference and other sources. Actively
developing LMDS products for years, they are in the processes of working on
second and third-generation high-performance, high-gain sectorized hub antennas
with improved azimuth and elevation performance for hub sectors.
“Although deployment seemed slow to catch on as service providers decided
what would be deployed, the market is now starting to mature,” says Bill
Corondan, sales account manager at Andrew Corp. “We are seeing strong
interest in our products and they are being incorporated quite successfully.”
Corondan points out that now that systems are being deployed in the real world,
the main issues are actually moving beyond propagation effects to other
concerns such as frequency reuse, coexistence with adjacent systems, and
optimizing performance.
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Global opportunities
Although LMDS is expected to have a strong presence in the US, industry
sources claim that the broadband wireless technology may actually find even
better acceptance in the international arena.
In contrast to the US, there is less competition overseas in terms of providers and
technology choices. Therefore, van Overbeek says that wireless technologies,
such as LMDS, could be the dominant last mile solution in developing countries,
especially those in Latin America and Eastern Europe.
Analysts at the Strategis Group also see great international opportunities for
LMDS. “There are even stronger opportunities for LMDS in other countries,
particularly in developing nations with under-served businesses. They may not
have demand yet, but will soon,” Welsh says.
Many countries are lacking existing fiber lines, resulting in large business sectors
that are without high-speed service. Even when fiber service is available, it may
be priced out of range for medium sized businesses. “Wireless broadband has an
advantage because it can leapfrog over wireline infrastructure, quickly providing
customers with high-speed data access or even data bundled with voice,”
observes Welsh.
Welsh sees particularly good opportunities in areas such as Brazil, Argentina,
and Eastern Europe. There is already wireless broadband activity in Poland and
some wireless broadband is trialing in Moscow.
A particular advantage of LMDS technology from an operator's perspective is that
it is flexible and scalable, which translates well for international markets with little
or no exiting fiber service. In fact, LMDS' ability to quickly get customers online
can serve it well in all markets since service providers won't need full coverage
before launching service. Additionally, unlike fiber, the LMDS infrastructure can
be moved if service is discontinued.
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About the author:
Janine Sullivan is a contributing writer for Wireless Design Online. Janine is also
the former editor of Communications Products magazine and the founder and
owner of The Write Solution, a technical writing agency. Janine can be reached at
The Write Solution, 108 Gloucester Rd., Parsippany, NJ 07054. Phone:
973-739-9780; Fax: 973-739-9781; e-mail: mailto:jsull@interactive.net.
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