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Technology Stocks : CellularVision (CVUS): 2-way LMDS wireless cable. -- Ignore unavailable to you. Want to Upgrade?

To: Tech Head who wrote (1698)	3/25/1998 12:32:00 PM
From: James Fink	Read Replies (1) \| Respond to of 2063

Sale of Wireless Frequencies Looks Like It Might Be a Bust By JOHN SIMONS Staff Reporter of THE WALL STREET JOURNAL March 25, 1998 WASHINGTON -- As bidding winds to a close, the government's largest auction of wireless frequencies is looking like a disappointment to the telecommunications industry. A number of industry analysts expected telecommunications carriers to pay close to $4 billion for licenses to a vast section of radio frequencies that will allow them to provide inexpensive high-speed voice, video and Internet connections. But as the bidding ends -- perhaps as early as this week -- the auction's gross is a disappointing $832 million. The new technology uses ultrahigh-frequency microwave transmissions as part of what is called local multipoint distribution system, or LMDS. The Federal Communications Commission, which began the auction a little more than a month ago, has been taking bids on two types of frequencies --one for 1,150 megahertz transmissions and another for 150 Mhz -- in each of 493 local markets. Local telephone companies and cable operators are barred from owning licenses in their home regions. In any auction buyers naturally try to get the sale item as cheaply as possible, but the stinginess of the telecom carriers involved in the LMDS auction is unusual, analysts say. It also may reflect a shift in the way they view the technology's potential. Some industry watchers say the initial estimates for the auction were somewhat overblown, but even so, "the auction has been sort of a bust," says John Wahl a telecommunications analyst with the Yankee Group in Boston. "LMDS is not the panacea that companies thought it was." Indeed, many companies initially believed that LMDS would immediately challenge local telephone exchange carriers, satellite and cable TV operators, and Internet service providers in the consumer market, largely because LMDS is somewhat easier and cheaper to deploy than those systems. The rosy estimates came from Strategis Group, a leading telecommunications-research firm, which initially valued the LMDS market at $3.9 billion in revenue. Strategis analyst Daniel Ernst says he doesn't see the auction as a failure, noting that carriers were able to buy vast swaths of the spectrum on the cheap. Strategis, based in Washington, estimates the LMDS market will grow to $7 billion by 2007. Only one company in the U.S.-- New York's Cellular Vision USA -- uses LMDS technology. The company's two-year-old trial of wireless cable TV service in Brooklyn has only about 18,500 customers. The company hasn't participated in the auctions but its chief executive, Shant Hovnanian, says he is still hopeful that the LMDS technology will become widely accepted. "Just because the dollars didn't come rolling in to the government doesn't mean it's not exciting technology," Mr. Hovnanian said. From the FCC's perspective, the auction estimates are moot. Agency officials say they are simply interested in distributing the licenses to as many companies as possible. "We studiously avoid making predictions," said Dan Phythyon, chief of the FCC's wireless bureau. The revenues from FCC auctions go to the Treasury Department. The Office of Management and Budget and the Congressional Budget Office were on the mark with their predictions for auction revenues, with estimates in the low to mid-hundreds of millions.