From the March 20, 2000 issue of Wireless Week
Mannetti: Fixed-wireless Market For SOHO, Consumers Is Huge
Last Nov. 15, Wireless Week broke the news of a trend-setting network that U S West Wireless
had installed in Salt Lake City. The regional CDMA carrier was North America?s first to join SS7
and Internet protocol networks using components from four manufacturers. The method cut tower
construction time from three days to a half-day and cut buildout costs by one-third.
Judith Lockwood, Wireless Week?s editorial director, recently spoke with Peter Mannetti, U S West
Wireless president and CEO, about the company?s progress in extending the partially proprietary
architecture to other cities. They also discussed third-generation services and Mannetti?s belief that
calling party pays won?t fly in the United States. Mannetti says he can?t speculate on whether a
pending merger of U S West and Qwest could result in the eventual spin-off of the wireless
properties.
Wireless Week: How are your rollouts across other markets progressing?
Mannetti: We?ve been very successful in Salt Lake City. Our subscription count grew to twice our
initial estimate, and it shows the strength of our ability to provide a service rapidly. Our new markets
are using the same architecture, and the growing pains have been far less than we anticipated. Nortel
and Ericsson have been outstanding, and we have a lot of confidence.
This year we?re rolling out Omaha and Lincoln, Neb.; Albuquerque and Santa Fe, N.M. [We?ll also
open] a number of markets, including Boise, Idaho; Spokane, Wash., and others across the northern
tier of our territory with our partner, Touch America. By the end of this year, we?ll cover our
14-state market. The news is in the ability we?ve had to expand our existing markets and run dual
architectures in the same market. A good example is Denver, where we had a footprint from
Colorado Springs to Fort Collins that we extended to Pueblo, Colo., and Cheyenne, Wyo., using the
new technology. We recently did that in the Northwest with Eugene, Ore., and Bellingham, Wash.
We?re doing it in Arizona with Flagstaff, Prescott and Sedona.
WW: Does this work like an overlay or is it parallel?
Mannetti: It works like an extension of our existing markets. We have a core Portland-Seattle market
and are using the new technology to extend it into Eugene and Bellingham. It is faster to deploy and
allows us to provide better reach for our customers.
WW: What?s the portion on which U S West has a patent?
Mannetti: We have patents on a lot of proprietary technology. The thing I like is that we?ve moved
our SS7 to an IP backbone. That?s a major step for companies to take in telephony. The fact that
we?ve installed this with a standard technology is a big step. It lets wireless voice operate more like
the computer world with mix-and-match components. The pieces we have patents on [let] us
program or develop our own feature functionality for the wireless system rather than having to
depend on major suppliers, and that gives us choices. That drives better consumer appreciation for
the service.
WW: U S West is testing unlicensed 5.8 GHz band to extend wireline DSL access. How will the
fixed-wireless plans work with the mobile side of your business?
Mannetti: We?re doing some interesting trials using that unlicensed band, which lets us think about
some crucial things going forward. How do we rapidly deploy in a neighborhood? How does that
look as opposed to central cell site deployment? How do we provide wireless services in an
unobtrusive way? We?re also learning a lot about the world of high-speed data over wireless.
Whether we think of it as fixed or mobile isn?t the issue. How do we deploy a reliable, quality service
to a wide variety of customers? Most of the high-speed wireless data companies are focused around
large businesses or small businesses centrally located in core towns. We think there?s a huge market
for the small office, home office and consumer segment. We view this technology as well as the DSL
stuff we?ve done on the wireline side as part and parcel [of the same service]. Our customers
shouldn?t care whether their high-speed data connection comes from a wireline or wireless
connection.
WW: Is this a counterpart to AT&T?s Project Angel?
Mannetti: I wouldn?t call it that. We don?t have a name for it yet, but we have real customers for this
technical trial and are getting lots of good information. We?re looking at long backhaul, long and short
distances from the cell site, and other conditions under which we can deploy. We?ll be in a position
to move rapidly as we unfold. We don?t have an end date in mind.
WW: Since you?re making a move to an IP-based network, how do you see U S West Wireless
evolving into third-generation services?
Mannetti: Going to 3G from the narrow bandwidth services today opens up bandwidth. Another way
of saying this is, ?What kind of applications do you see using this?? I don?t have a limit in my head for
two reasons: First, why stop at 384 kilobits per second? Bandwidth could increase beyond the
standard we have now. And the second thing is compression technology is also driving usage.
I have no preconceived notions of what we?ll do over 384 kbps. I think it will span a gamut from
information services like stock quotes to two-way transactions straight through to streaming video,
depending on the devices you carry. U S West will migrate its services over the appropriate
standards. We absolutely want to move to 1XRTT and follow that with a move to 3G.
WW: What kinds of compression technology is U S West evaluating?
Mannetti: We?re looking at video compression enabling full-motion video over low-speed data, such
as 14.4 kbps, and voice compression supporting toll-grade voice over low-speed data links. The
latter could triple capacity.
WW: Is 10 megahertz enough spectrum for most of the services you?d like to offer?
Mannetti: Yes. Fortunately, we have 10 megs (laughs). Isn?t that a good thing? I?ll get back to the
notion of what?s happening with compression technology. FCC Chairman Kennard says the single
most precious resource we have is spectrum. There are two ways to think about it. Yes, we want to
make more spectrum available and yes, we should make efficient use of spectrum.
U S West Wireless is a very efficient spectrum user. In some cases we are on one carrier where our
competitors are on their third carrier. We don?t squander it.
WW: What are some of your biggest headaches in competing with national carriers, especially
regarding buildouts, marketing and churn?
Mannetti: First is the lack of competitive density of our markets. If I put up a cell site in Denver, it?s
35 percent less dense than one in northern New Jersey, so we must be very efficient in the way we
construct. It?s challenging. Same on the marketing side of the business. We absolutely use a
differentiated platform to compete. Our integrated services are the single biggest differentiator we
have. Our churn on those services is substantially less than companies that don?t have them. We?re
looking at differentiated product and low cost to compete.
WW: How many subscribers do you have on your company?s Access PCS service?
Mannetti: We were at 466,000 at the end of last year with 122,000 of those coming in the fourth
quarter of last year alone. That?s an interesting indication of how we compete. We have 17 million
POPs built. AT&T added 440,000 subscribers on about 178 million POPs in the fourth quarter [not
including acquisitions not yet closed]. The numbers speak for themselves.
WW: What?s been the most effective marketing tool in turning wireline customers into wireless
subscribers?
Mannetti: The most effective tool is a differentiated service from a company they know and trust, and
that?s how we position it. We provide good quality service at a fair price.
WW: What are your feelings about calling party pays and the reasons Bell Atlantic Mobile says it is
promoting that service?
Mannetti:When U S West was still NewVector Group, subsequently acquired by AirTouch, it clearly
had tried CPP in the early ?90s in Arizona. It was successful from the perspective of cellular growth,
but that?s when cellular costs were 50-60 cents per minute. Today we?re talking about substantially
lower average costs. Our wireline customers don?t like the idea of having to pay for a call.
WW: How do you know this? Have you polled them?
Mannetti:That is probably somewhat anecdotal but [comes from] a perspective of flat-rate services in
the Western states as opposed to measured service in the Eastern states and Europe. It?s a
fundamental difference in perception. If the notion of CPP is to drive cellular growth, I think it?s
[already] being driven pretty well so I don?t see the necessity to grow that faster. Ultimately I think it
would lead to a notion where all incoming calls are free, which is a difficulty in terms of investments
we need to make to support the growth we need.
WW: So you don?t think it?s a viable economic proposition?
Mannetti: I have concerns about it?too many freebies. The wireline customers will rebel against it,
and the wireless companies can?t afford to absorb [the costs].
WW: Have you looked into Qualcomm?s High Data Rate technology? If so, what is your conclusion?
Mannetti: I?ve been following it closely for the last year. I think the whole notion of high-speed data
over radio is extremely important, whether it?s Qualcomm?s data-only version or other versions of
the same technology, you?ll see it coming. You have to have enough imagination to say, ?How do I
put voice over it?? I?ve looked at others that do carry POTS lines. I think there are interesting
challenges from perspectives of mobility and portability, but they?re not insurmountable.
WW: Any point you?d like to underscore?
Mannetti: I?ve been in this business for about five years and I came to it without a telephony
background. It?s incredible to see the progress the industry has made in a short period of time.
Wireless is, as FCC Chairman [Bill] Kennard has said, a force to be reckoned with.
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