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

To: Hiram Walker who wrote (1736)	3/28/1998 9:44:00 PM
From: James Fink	Respond to of 2063

Barron's Online -- March 30, 1998 We know the government's auctions of airwave spectrum raised the disappointing sum of $578.6 million, but it's tough to figure out just how the winning bidders will affect the rapidly changing telecom world. The spectrum sold last week is for something called local multipoint distribution service, or LMDS. With it, a company could get its phone, TV and Internet access by using radio signals sent through the air instead of depending on cables and wires owned by telephone or cable television companies. In many ways, the technology is similar to that of a cellular phone system. But with LMDS, the sender and receiver must be stationary and the signal has the capacity to carry large chunks of information, such as data files. In contrast, a cellular phone is portable but can only carry voice or short data messages. Since the two have such different applications, companies using LMDS waves and those providing cellular phone service aren't expected to compete for the same users. "You don't substitute one for the other. It's like having a boat and a car," one analyst explains. However, in an earlier auction, a number of companies had bought spectrum that's similar to the one used for LMDS. The two types of spectrum have some differences, but they can transmit essentially the same amount of information, just as quickly and in a similar fashion. Companies such as WinStar Communications, Teligent, Advanced Radio Telecom all bought spectrum in the earlier sale and have sold junk bonds to finance the startup of their systems. At first, some feared that the low price fetched in last week's auction would hurt these companies. But it appears that the market is much more focused on how well management is executing its business plans, for the cost of spectrum is just a sliver of the total tab for getting one of these systems running. So, who will come out ahead in this new type of communication? "He who gets the spectrum and starts to deploy it first has the advantage," quips Robert Waldman, head of corporate bond research at Salomon Smith Barney. He has "buy" recommendations on WinStar and Teligent bonds. Right now, WinStar is farthest along in its development, with Teligent one to two years behind, and the LMDS winners at least two years back in the race to provide meaningful service, estimates David Wells. Wells, the high-yield analyst at Societe Generale Securities, has a "hold" recommendation on WinStar paper, because of the recent rise in its price, and does not rate Teligent. Although the spectrum might not have fetched as much as expected, the good news from the auction was that only one party, WNP Communications, emerged as potential competition. WNP bought a huge amount of spectrum that covers 114 million people. But that's still smaller than WinStar's coverage of 185 million or Teligent's 130 million. "It's clear that only one significant new player, WNP, came out of the auction. No one compiled a national footprint as large as WinStar or Teligent," notes Leslie DeBauge, a high-yield telecom analyst at CIBC Oppenheimer. It's one of the reasons she's put out a "buy" recommendation on both WinStar and Teligent bonds.