Sprint, MCI Continue Broadband Wireless Play
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With its operations in Phoenix and Tuscon, Ariz., representing only a drop of its market licenses, Sprint Broadband Wireless Group is preparing to open the floodgates for its fixed wireless Internet offering.
The division of Kansas City, Mo.-based Sprint [FON] and its two largest competitors in the U.S. market for multichannel, multipoint delivery services, MCI WorldCom [WCOM] and Nucentrix Broadband Networks [NCNX], have filed a total of 175 applications with the FCC seeking permission to provide two-way MMDS on spectrum licensed for one-way service.
Sprint Broadband has signed on more than 5,000 customers in Arizona since launching MMDS services in Phoenix this May and in Tuscon the following month.
"We have not had to spend a single cent of advertising or marketing money," says Sprint Broadband spokesman Robert Hoskins. "We're actually afraid to spend money on advertising because we've already experienced a flood, or a wave, or whatever you want to call it, of business."
The company has filed applications with the FCC to provide two-way MMDS on spectrum in 45 other markets across the country where it is licensed for one-way service. Sprint Broadband's licenses for Colorado Springs, Colo., Detroit, Houston, San Francisco and San Jose, Calif., already are for two-way service.
MMDS delivers wireless broadband services to "fixed" customer locations, using primarily the 2.5 to 2.7 GHz band of radio spectrum. In rural America and other underserved areas, MMDS will be the first broadband pipe into the home or small business. In other markets, MMDS will be a competitive broadband alternative to DSL or cable modem services.
MCI WorldCom, Sprint's former merger partner, has filed 60 applications with the FCC to allow two-way services in markets across the country. MCI WorldCom has not launched commercial wireless broadband services, but it is testing its MMDS system in its headquarters, Jackson, Miss., as well as in Baton Rouge, La., Boston, Dallas and Memphis, Tenn.
Nucentrix has filed applications for two-way services in 70 markets across Texas and Midwestern states.
The FCC accepted applications from operators of MMDS radio frequencies for licenses to provide two-way communications services between Aug. 14 and 18.
Sprint, MCI and Nucentrix are members of the Wireless DSL Consortium, which was launched in July to light a fire beneath industry deployment of broadband wireless access products. The consortium also includes ADC [ADCT], Conexant Systems [CNXT], Gigabit Wireless, Intel [INTC], Nortel Networks [NT] and Vyyo [VYYO].
Sprint Broadband plans to launch high-speed wireless Internet services in Colorado Springs, Houston and two California markets next, Hoskins says. Before the end of the year, the company plans to be operating in 15 to 20 markets. And next year, it will add 50 more, he says.
"It's going to be a race," Hoskins says. "Speed to market is key, just like in every market."
And Sprint Broadband is sure it has lapped the field in rolling out high-speed Internet services for consumers. "The biggest demand has come from the residential part of the equation," Hoskins says. "So many people are into the Internet now and they're tired of having a slow connection."
Wireline-based Internet service providers don't seem to be in a hurry to span the last mile and deliver high-speed connections to homes. While businesses pay for high-speed service on T-1 lines, few consumers will pay the fees for residential service.
"There's not one [competitor to Sprint Broadband] and that's why people are flocking to the service," Hoskins says. "The only thing comparable is a T-1 line, which costs $1,500 a month or so. We think this is one of the things that's going to stimulate competition."
Sprint Broadband charges $39.95 a month for residential users, and $89.95 a month for businesses with up to 55 terminals.
MMDS technology requires line-of-sight connections between users' receivers and providers' transmitting antennas. Although Sprint Broadband's towers can reach receivers within 35 miles, the line-of-sight limitation can impede offering service to some customers without other antennas used as repeaters to carry signals around obstructions.
Other technology - orthogonal frequency division multiplexing - is being developed to transmit wireless broadband signals around buildings or other obstructions between MMDS transmitters and receivers.
"As soon as we think that technology is ready, we'll put it to work," Hoskins says. "The only reason you put in multiple towers is just to add more pathways for line-of-sight, or to add more capacity."
MCI WorldCom Seeks MMDS Authority
MCI WorldCom has said it plans to leverage its fixed wireless assets with other broadband technology solutions as part of its "generation d" drive.
According to MCI WorldCom Director of Product Management and Development for Wireless Solutions, Michael Barnes, the carrier is unlikely to see many petitions to deny being filed.
"We made our applications quite carefully," he says. "I'm sure there will always be competitive positions and competitors who would probably rather not see us in the market, but I don't expect there to be a concerted effort to file petitions to deny. There certainly could be - I'm not ruling it out - but we're not expecting it."
Barnes won't divulge additional cities in which MCI WorldCom was interested. "It's premature of us to identify those markets at this point. The markets in which we will apply in the future will depend on where we stand in receiving license authority and also on the continuing development of technology - it's partly a function of where we stand in this current filing."
After MCI WorldCom receives authority to provide service in an individual city, it will be able to start providing service in that area.
"We're providing a high speed fixed wireless broadband service today in trials in Jackson, Miss., Baton Rouge, La., and Memphis, Tenn.," Barnes adds. WorldCom commands a 43 percent market share in the U.S. wholesale market, largely because it is the company behind UUNet and AOL, making it number one for Internet services, says IDC telecom analyst, Steven Harris.
The service provider will formally roll out commercial MMDS service in Memphis in the fourth quarter of this year. It plans to offer services in 20 of the 30 markets by the end of 2001.
"We can provide broadband services to our customers in a variety of ways, and frankly, our customers are not specifically interested in particular frequencies the service runs on, as long as it works seamlessly and very well. In Memphis, we'll be able to provide high speed broadband services, just as our market strategy is to be able to provide broadband services - both wireless and wireline - depending on the customer's needs. We'll go to market with a full complement of broadband access services - MMDS, DSL, private line and other technologies," Barnes says.
As for pricing MMDS services, Barnes only says, "they will be priced very competitively with enterprise quality DSL services, our primary technological competitor."
What is WorldCom's fundamental pricing strategy? For Barnes, WorldCom's pricing strategy is to price services competitively on a 'stand-alone' basis.
"Our customers, especially our larger business customers, gain the benefit of the more business communications business they give us, on both the voice and data side, the greater their discount. That's all part of our offer and strategy for the business customer, and our wireless services fit into that. The more business a customer gives us, the greater the discounts that can be applied to those services. Customers on a stand-alone basis may only want a particular service from us - and we try to price that competitively - but as we bundle more services, we want to be even more competitive for our customers," he said.
Lisa Pierce, a telecom analyst with Giga, says that, while WorldCom's MMDS service would "help it serve its customer base better," it was unlikely to affect the carrier's position in the U.S. market.
"In terms of the services WorldCom sells, it generally ranks third in customer satisfaction behind AT&T [T] and Sprint [FON]. I don't think its MMDS services will help it to steal customers away from those two operators," she says.
WorldCom's primary target market for the latest service is the business customer, especially SMEs, where it will provide services as a complement to its DSL services. But Barnes also highlights the potential revenue that could be generated by offering MMDS service to customers in an apartment complex.
"We believe that for the MDU market (multidwelling unit market), fixed wireless services can be a very compelling broadband offering. Several of our competitors are also addressing that market. We believe it's an evolving market.
"As volume scales down the cost of CPE (customer premises equipment), and as more and more vendors ramp up to be able to provide fixed wireless services, that's when you're going to see prices drop. And you'll start to see much more widespread penetration in the consumer market," Barnes says. "Right now, it's hard to competitive on a consumer level, whereas it is very compelling and very cost competitive to serve business users. When businesses want a T1 - even when you factor in the cost of the equipment - it can be very cost compelling."
For more information on MMDS, contact The Aberdeen Group. |
