WCA Show Report
“The Dawn of Mass Market Broadband Wireless”
1 Show Report
1.1 Introduction
The WCA[1] show this year was promoted as the show on the “dawn of mass market broadband wireless”, given it’s timing is on the eve of the industry’s first certified interoperable products from WiMAX[2] and this forum’s eminent opening of certification labs in Spain, with several vendors “first in line” for certification. The show was upbeat, with much talk about “personal broadband wireless” and how personal broadband, when brought to you via wireless, will provide a “life changing” set of services, applications, content and communications newly available to you while you are on the move.
1.2 Deployments and Expansions
Participants at the show, including operators I talked to off line, were interested in the WiMAX standard and how their current vendors, or other vendors, could offer them opportunities for system or market expansion. They all were hopeful that Intel could drop the price of chipsets and consequently CPE to allow for better expansion business cases. So what Intel was saying was important to operators.
The transition plan for the 2.5 GHz BRS/EBS band was of keen interest, although no one has done serious movement yet due to issues described below and sent to the FCC in petitions for reconsiderations. And operators are looking for techniques for planning their expansions and transitions and tools are of interest (such as CelPlan[3]) for doing that planning.
Here is what Intel had to say. Mr. Scott Richardson, the GM of Intel’s Broadband Wireless Division, indicated that the next billion users of the Internet will do it wirelessly, via third world cellphone and fixed wireless access networks, thus adding volume to wireless production. He defines broadband as one megabit service, and personal broadband is Internet access to your phone, home, pocket, and anywhere you move to. Current forecasts show good DSL and cable growth in broadband access-to-the-Internet category, but show wireless networks in the “other” category with slower growth. This is flawed due to its linear extrapolation of what is happening today. If you take into account Moore’s law, and the trend that users want connectivity while away from the home and office, you begin to see the “other” category grow much more significantly. Clearwire is an example, in a mature market, 40% to 60% of subscribers want portability. In emerging markets the first experience of broadband is through wireless. Intel’s biggest markets for laptop PCs with wireless broadband are in Brazil, Russia, India and China. WiMAX is now open for business for fixed service and ready to serve. With Moore’s law, where computing power doubles every few months, broadband will soon be in your pocket. Looking at trends in computing, the device capabilities are beginning to blur the distinction of phones, PDAs, tablets and laptops. More laptops are sold now than desktops – so the trend is mobility. Intel does not care as long as their silicon is in all these devices. The industry can’t tell which device will win, so do a platform for services and applications and let the market call what device is a success. Looking at the iPOD, we have 20 Gig hard drives today on these small devices, soon the graphics in a smart phone will be what we have in your PC today, and soon, 1 Gig PC processor performance will be there too, so low cost powerful devices will come, thanks to Moore’s law. WiMax is a movement to more or less catalyze the broadband wireless category. At last, the regulatory, investment, and industry focus is on a common set of products. WiMax 16d is ready now through the end of the year with trials. 16e is one year behind. Korea is ahead and will have the first commercial service for both. With the amount of time and effort, and number of engineers and others putting effort into WIMAX, we are at a critical mass for deployment – this is an organization formed around the personal broadband category. We must be careful however to not repeat the cost structure of the past, as in cellular. Cellular can support voice and some data, up to say a minute or two video clip. However with personal broadband we may be able to support up to a 90 minute video movie within an acceptable price point for the consumer, but we have to take costs out of every layer of the supply chain. WiMAX is here with new devices, and traditional applications, but we need to get focused to reduce the cost per bit and know what role we all play to do that and succeed.
Mr. Ron Resnick, of Intel, and chairman of the WiMAX forum, had the following remarks. WiMax is a common standard in IEEE, ETSI and increasingly worldwide. It’s an all IP packet network structure – now we need the right services to deliver it. Last year the WiMAX forum had 3 operators, now we have about 120. Over 350 members are in the forum at this point. This is a validation of the ecosystem growing around WiMAX. We are promoting certification worldwide, with network architecture for mobility, and an application working group that includes Microsoft, Disney, and AOL. Operators want to drive down the cost of the client device through a manufacturing working group and optimization of the supply chain. With multiple vendors, subsidy of the device is not necessary and more affordable for broadband solutions. WiMAX has received lots of press – 2000 articles so far. There is defiantly a buzz around what is happening. This is the first time we see a standardizing approach on such a scale with multiple vendors of choice, low cost clients, multiple spectrum certification, first at 3.5 GHz, then 5 GHz but also 700 MHz, 2.3 GHz, and 2.5 GHz. To join in the WiMAX certification process, applicants inform WiMAX first, and then provide three base stations and three clients for interoperability testing. WiMAX has received numerous applicants at this point. There are over 100 trials to date, based on surveys, but we think that is an understatement. Most vendors have pre-WiMAX products now that are software upgradeable to WiMAX as soon as appropriate. Cetecom Labs of Spain[4] opens for WiMAX testing in July and vendors are submitting deposits now for entry. The 3.5 GHz products will be tested first. We expect certifications to come out as soon as November. Mobile WIMAX is the new wave of personal broadband. What cell phones did to the landline, what laptops are now doing to desktops, mobile WiMAX will do to Internet access: taking voice and data to the mobile user. We predict that labs will open in 2006 for certification testing and mobile trials will take place in early ’07. The Koreans are ahead with WiBro[5] (WiBro is a broadband wireless internet technology being developed by the Korean telecoms industry. In February 2002, the Korean Government allocated 100MHz of spectrum in the 2.3GHz band, and in late 2004 WiBro Phase 1 was standardized by the TTA (Telecommunications Technology Association) of Korea. WiBro base stations will offer an aggregate data throughput of 30 to 50 Mbit/s and cover a radius of 1-5 km. SK Telecom and Hanaro Telecom have announced a partnership to roll out WiBro nationwide in Korea, excluding Seoul and six provincial cities, where independent networks will be rolled out. In November 2004, Intel and LG Electronics executives agreed to ensure compatibility between WiBro and WiMAX technology[6]). Samsung, Korea Telecom, and others will take WiBro to WiMAX for certification, and this will help make it a global platform. WiMAX is a smart overlay to a cellular network, it’s cheap, IP based, and scalable to different spectrum bands, different market differentiation, and different market opportunity, by going beyond the basic voice and “broadband lite” they offer, to true personal broadband. WiMAX will put together a market assessment to see how big personal broadband really is. We believe it is huge, and that kind of success cannot be delivered through just one technology. Applications and services use the technology that is successful for them. Intel believes that 4G players will all use OFDMa technology and it will delivery via IP technology. So Intel says WiMAX is the first play not the only play for personal broadband.
Vendors of interest to operators are those with a path to standardization.
Here is the news that some of the leading vendors provided at the show. First we start with what Alvarion communicated and what came through clearly (and what did not) to operators (at least to me listening with an “operator” ear).
Alvarion – Mr. Zwi Slonimsky, CEO described Alvarion background and strategy as having helped start the WiMAX forum in 2000/2001 as a leading vendor in that forum. Alvarion has the largest market share and is presently the market leader. You have 2 million units installed all over the world. You are helping consolidate the industry by having one major merger and two major acquisitions. You have had a “WiMAX ready” platform that is software upgradeable to a full WiMAX version since 2004. In your due-diligence, be careful when vendors say software upgradeable. 802.16e for mobility is the next phase, and Alvarion will continue to lead the industry towards portability and mobility. Broadband is going to be everywhere, there will be consolidation into one network, there will be triple play, and video to the handset in various shapes, delivered everywhere. There is a trend to move from telecom to IP, from voice to content, toward VoIP, and many new revenue streams including online gaming. The market demand is growing, and the technology is enhancing. WiMAX is moving toward the 4G arena. Two months ago, Alvarion introduced a fixed pre-WiMax system with the Intel Rosedale chip inside, working and now shipping for commercial applications. At this show, Alvarion introduced a new self-installable CPE, and in the near future, Alvarion will introduce a new portable unit (late this year). You will introduce a mobile platform in early 2006. Alvarion owns significantly over 50% of the trials of pre-WiMAX worldwide. Self installable equipment is introduced at this show[7]. WiMAX is better than 3G/PCS, not because we in WiMAX are smarter, but because we are a newer technology. Some feedback on the talk would be that I did not hear clearly whether Alvarion is in the first wave of WiMAX certification or not, and if so, that should come out more strongly. Also, it would be helpful to have information on ways to be backward compatible, and what to watch out for. And allude to a private list, that would be useful, of vendors in the first wave of WiMAX supporters (putting their money where their mouth is), versus members (who may even be on the board) but are still trying to get their proprietary technology incorporated into WiMAX but not truly supporting the standard, and “the rest”. This is officially held as confidential, but I also heard announcements, see below, and one can create an “off the record” list I believe.
Airspan – Mr. Eric Stonestrom, CEO of Airspan remarked that Airspan was founded in 1998, and had sales of $94.5M last year, they have 250 employees in 26 countries, with locations in Boca Raton Florida and centers in the UK and Israel. They build mostly international 3.5 GHz products, but also some in the 700, 900, 2.3 GHz, 2.5 GHz, and 5.8 GHz bands, for both licensed and unlicensed operation. They have 200 operators, in 100 countries. They recently acquired a soft switch company to provide carrier quality voice as well as data, but they note that their customers still derive about 70% of customers revenues via voice – don’t discount voice. AirSpan uses Flextronics[8] and Solectron[9] as their OEM manufacturers. Their strategy is to move from fixed broadband to personal broadband using the catalyst of WiMax as the enabler. They view WiMAX as changing the paradigm of delivering signals from a structure to an individual, with a wide range of user devices. They have a scaleable base station that goes from the low end capex of $5000 to larger systems. This is useful for low density sites or sites offering just a few customers for example a T1 replacement; you want a low cost base station. New products will be shippable directly to the home with simple LEDs to indicate signal quality. This will eliminate the truck roll to potential subscribers. The clients will have version that support consumers and business, with options of embedded WiFi access point functionality, SIP Phones, VoIP phones, residential gateways, and for business, VLAN tagging and other enterprise applications. The units will incorporate smart antenna technology for improved link margin. AirSpan announced a big deployment in Japan -- 1200 base stations. They were selected due to their wide range of CPE options and scalability of their BTSs.
Aperto – Mr. Reza Ahy, CEO of Aperto described how WiMAX fits into the scheme of things showing a chart that indicated WiMAX is faster than HSDPA and 3G UMTS, and has the features of portability and mobility versus fixed wireline which has neither – WiMAX has lots to differentiate it. He defines broadband as a megabit of service to the platform or device. Aperto was part of the founding group of 802.16, the basis for WiMAX. They chaired the Mac-layer subcommittee, and other committees there, and they are on the board of WiMAX. Their employee, Mr. Don Chang, chairs the WiMAX Service Provider Working Group that now has over 100 service providers. Aperto now has over 220 service provider customers in over 60 countries. They have doubled earnings every year in the last three or so years. Their approach is to provide carriers with equipment that can provide carrier class guaranteed service level agreements (SLA). All patents they own provide interference resilient and mulitpath resistant quality of service (QoS), and reliability. They believe they are the only company with true ATM like constant bit rate (CBR) circuits over wireless today. Aperto is in the first wave of certification for WiMAX interoperability at Cetecom labs for a July start. They plan to have certified products by the end of this year[10]. Aperto has several major deployments with 90 % of their business in the licensed bands. They believe that the 2.5GHz BRS band is a significant asset for broadband. This band will allow operators to deploy wide area networks. Mr. Ahy noted that Intel said 4G is a 10 Mbit per user pipe. Aperto has offered 20 megabit burstable upstream pipes per user for the past four years (so they say they are “4G” today by Intel’s definition). WiMax is a core piece of 4G, and is complementary with WiFi and 3G UMTS. So there is plenty of room for all these technologies to complement each other, for such a big market. Aperto sees portability overlay for nomadicity late this year, in the market early next year, and full mobility late next year. Aperto offers clear differentiation by providing an SLA-capable network, consumer to business features, and 256 best effort to 5 Mbit constant bit rate capacity.
Redline – Mr. Majed Sifri, CEO, indicated that Redline was established in 1990 in Toronto, Canada, and has offices in 9 countries, with commercial deployments since 2002, They are backed by two of the largest US Venture Capitalists and one of the largest Canadian media and telecom investment companies. They are leaders in the broadband wireless space and have always been focused on OFDM. They have customers in 75 countries, with 90 local partners, 16,000 systems deployed, and 1000+ end user customers; they have averaged 222% AGR. Last year they were deploying 802.16a compliant systems and have 30 such deployments around the world today. They announced a WiMAX platform and demonstrated an 802.16d compliant system informally and will be getting a formal certification in the first wave. They now have a third generation PHY, a second generation MAC, and multiple generation OFDMa experience. As far as a WiMAX strategy, they are firmly committed to WiMAX and the personal broadband market, equipment development, certification, and a credible cost reduction path, especially on the CPE. This will improve investments for service providers, and allow service providers to not to be dependent on a single vendor. Redline will drive the market to good cost points, a need to interoperate; it will prove-in their technology with another Intel based CPE. Redline will be going to market with outdoor device sub-$500 in cost and will show operators they can push the cost curve to down over time to match the WiFi cost curve at some point. Getting the price for CPE down will require sub $10 chip sets, but it will make investment payback come quick for operators. Redline is interested only in how to make good base stations – that’s how they will control their destiny. They will start with 3.5 GHz 16d compliance systems in the first wave of Cetecom testing, then 5.8 GHz, then 2.5 GHz technology. The first 18 months of WiMax will be deployed by major service providers, in the licensed service provider bands. Redline has a strong focus on migration: migration in a field via programmable upgrade methods. 802.16d will be shipping next quarter, 802.16e in 2H 06, coexistence of current pre-WiMAX and WiMAX in the same sector is important. Redline has the advantage of 18 months of 16a in the field, and they learned a lot. Redline is differentiated by having the most spectrally efficient approach and technology in the market. It’s easy to deploy and maintain, and they have realistic pragmatic solutions for grow. Service providers want to kick the tires early, and they can do that by using Redline equipment for backhaul now, then grow pragmatically as the market grows.
NextNet - Mr. Guy Kelnfofer III described NextNet technology as “the future of WiMAX today”. NextNet is contributing at the WiMax forum by showing fixed, nomadicity, full mobility, VoIP, video streaming, gaming, all done today. NextNet’s view of what people want is different that most. Today people want reliable broadband first, personal mobility next. By offering several levels of modulation, four level, 16 level, 16 level lite, and 64 QAM early on users get reliable service and later get higher and higher speeds as you optimize the network overtime. When many users are on the network you then go to VoIP. NextNet uses a carrier’s carrier model with MVS in Mexico. MVS delivers branded service to AT&T Alestra[11] and MCI Avantel[12]. They showed a slide of traffic for 22,000 calls a day in three cities of bundled VoIP and data since their May launch. They have QoS, synchronized VoIP sessions bundled with data services. AT&T and MCI in Mexico deliver residential gateways and VoIP plug and play. NextNet offers mobility today for the public safety mobile user. NextNet will go to personal broadband later. Public Safety now needs instantaneous background checks of suspects, images and video. NextNet believes that people don’t want their TV sets in a cell phone, but in public safety, video is crucial. Gaming is a key application; they are doing that today in Europe and the US. NextNet believes in seamless technology corridors that bring productivity to the home, office, car, and everywhere in between. NextNet is a member of WiMAX and strongly supports standards, and will continue to work with parterres to bring today’s learning to the standards committee. NextNet sees strong growth in the market. All broadband companies however face the same issues of global harmonization of spectrum for VoIP, data, video services. And also important is the need for a stable regulatory environment.
Navini – Mr. Sai Subramanian VP Market Strategy indicated they have a relationship with a tier one carrier, Bell South, and they will do a few markets with Navini gear. Navini has 25,000 users in Australia. For personal broadband we need “rev e” finished, “rev d” is good for high end enterprises wanting backhaul etc., 16e is better for mobility. Today Navini is already delivering almost all the capability of 16e, but in a proprietary way for now. Phased array technology will be good today and tomorrow. Don’t forget good network element management software. Today, Navini is deploying retail models, where the box is from a store, and users can take it anywhere in Sydney to have broadband access. Navini believes that 16e or any broadband personal indoor technology needs a 3-times increase in higher order modulation and data delivery; it needs some type of advanced antenna system, to get the link margin to do personal broadband indoor properly. Spectrum is precious, and Navini gives double the frequency reuse with their smart antennas as most non-smart antenna system companies. If you want a time to market advantage, and you want to roll a plug and play system today, but you also want to go to a 16e mobile WiMAX solution, then Navini can do that today, and deploy your network in an evolutionary fashion. Just launched is a new software upgradeable platform that a provider can deploy today, as it’s upgradeable to 16e next year, that way, your legacy devices are not stranded. Navini will be launching fully compatible 16e mobile WiMAX. Customers can start with current equipment and upgrade it to 16e. Be careful in your investigations of vendor’s equipment who say they can do software upgrades to WiMAX. Upgrade questions you should ask are: Is the platform actually upgradeable? Will ASIC based CPE upgrade? (not likely). Will your deployment grid change? (A fixed wireless grid is different, so your deployment grid may change dramatically). A good way to do it is to keep the deployed CPE and use a dual mode base station. An overlay like this does not require a CPE change-out.
Alcatel – Mr. Michael Seymour, VP Broadband Wireless, sees that users want applications, delivered seamlessly, on a plethora of devices. Network complexity must be reduced, and users need different “entry points” for access (which may be WiFi, WiMAX, or 3G/PCS for example). Using a QoS based, end-to-end service provider, they can get a subset or all of their services, content or applications, depending on the prices they pay for mobility. End users want an “always best connected” service, with the same “triple-AAA” (Authentication, Authorization, and Accounting – the billing system) in the background, and with the same user profile across access networks. The 802.16-2004 standards are meant for fixed solutions, and maybe a portable unit can be used nomadically. WiMax Rev e is defining the fully mobile application; 3G has traditionally dominated that sector. But now Alcatel will harmonize and help to combine these network services, and offer a bundled network for all services and applications. And it will reduce overall cost of delivering those services. Alcatel will do this with three types of applications, as users need to move from one base station within or across access controllers, they call that micro-mobility, and when moving between multiple networks they call it macro-mobility. They can solve the mobility technically; the challenge is to work together to make it work seamlessly between WiFi, 3G, and WiMAX. We can improve the link budget by using WiMAX outside and WiFi inside. Alcatel believes that whatever is best for the subscriber is what is needed. WiMAX global rev e may provide a seamless global network someday, but not “day-one”, so for now, Alcatel offers a design of a system that is interoperable and seamless to the users using multiple network access methods. The view was expressed that carriers want personal broadband, but so do other sectors, including RBOCs, Satellite, and Cable as well as enterprises. They want triple play and quadruple play with SLAs in place. WiMax will offer higher less expensive throughput in hot zones, DSL fill in for RBOCs, and it is complementary to 3G/PCS now, but will open up other markets segments later. IEEE, 3GPP, 3GPP2, WiMAX and others are working on standardized network architectures, and seamless network architecture will emerge.
An independent source[13] lists Ericsson, Motorola, and Nokia as well as several of the above companies as equipment vendors that are well positioned for WiMAX.
1.3 Operators Interested in Expansion or New Revenue Streams
Operators are interested in expansion. Smaller operators are looking to the bigger operators to see how to offer compatible services, or as an exit strategy as the bigger operators may purchase the assets of the smaller operators in the future. Some operators are drilling their current vendors for how well they perform VoIP. An opportunity to excel in this category should bring new business.
The bigger operators at the show had the following to say.
Clearwire (Perry Satterleee COO Clearwire) – What is important is customer service. Customers want broadband where they want it when they want it. We need sustainable differentiation. Clearwire found experts in broadband wireless, took 9 to 12 months to understand the environment. And in the last thirty days they have launched over six markets, which doubles the number of markets in their company – this is just the beginning. Customers want no truck roll, no software downloads no damage to homes. Clearwire has 10 US markets and two international markets on line. Clearwire brings portability, great customer service, and simplicity to the business. Best buy has spent lots of money on the geek squad because technology is intimidating. Clearwire must show customers clearly how to get started with pictures showing how to plug into wall, Ethernet, etc. “So simple even an adult can do it.” Some of the markets they are in include Abilene, Odessa, Daytona, St Cloud, Jacksonville.
Nextel – Atish Gude, VP Strategic Planning, indicated there has been a history of 40 years of failure in this band…spectrum played a role in this failure, spectrum issues, interleaved, no single audience, lack of standards, bad business models. Wi-Fi is a success, but some lessons learned include the technology must be plug and play. Unlicensed spectrum has some issues, but at least it is the same everywhere you go, and it works pretty good everywhere. We are on a nexus. Nextel performed a market service trial in Raleigh Durham, some of it was a technology trial but mostly it was a sales and marketing trial, how do users consume it. In Raleigh, they learn three things: 1) a technology network and ecosystem is important – we need an entire ecosystem, not just a radio interface. We need applications, delivery, back office that highlights customer service and business completeness, 2) We need lots of cards, devices, embedded systems, not just laptops. We need robust devices and chipsets for multiple services, 3) innovative services and applications – Access is king for broadband since the Internet is so robust, but also there are lots of applications and services that portability and mobility suggest are relevant, key and important. Broadband speed - cable DSL is the benchmark for what broadband really is, so wireless broadband must approach the perception of cable / DSL like speed. Coverage - we must have it almost everywhere. Cellular adoption kicked in only when it was everywhere. Access is important, devices are important, but also a seamless experience between content, applications, and devices is critical, and simplicity. It’s an ecosystem we need to bring to market to drive up the adoption curve. We need distribution strength. Also customers want to trial it, if they are going to pay for it. Competitive pricing, differentiation, cable DSL is where broadband is, we need to go beyond, incremental utility to cable DSL, portability is the way to compete, provide them to content they know exists, and with good applications. To be un-tethered is a life changing event. Users can now go with their children to watch them play sports, and still be connected to work -- it’s a life changing event, for that individual customer. Construction, remote locations, entire mobile offices are now possible, instead of waiting for a connection back at the office, workers do it seamlessly using a VoIP box, connected to the Internet, and can set up a whole mobile office, with saved time, increased productivity, these are more examples of life changing events. Portability is the one utility beyond DSL and cable that will make wireless broadband competitive. The remaining issues are, we applications, services, and devices (a laptop is important, but we need more devices enabled, we need ease of use, and technology maturity must continue, we must address the spectrum issues – the WCA is working to clean it up, and to put a workable economic model behind it. The Sprint-Nextel merger will offer financial strength, brand strength, and be uniquely positioned to drive the market, but a larger group of people is needed to drive it: suppliers, competition, standards, and others for market adoption. WIMS, wireless interactive multimedia Services is coming. We are a very visual culture; we want information now, in a broadband portable form. WIMS, portable access, online gaming, document collaboration, video conferencing, and multimedia services have highlighted the need for broadband instant connectivity, and the need for interactive-ness delivered with simplicity. A wireless portable broadband service will bring more utility, so bring out the portable applications to help compete. Nextel keeps looking at the technology. Nextel will do a new trial in 3Q04, with TD-CDMA by IP Wireless in Washington DC. It is the next evolution in how they will evaluate technology and service delivery models. Nextel thinks WiMAX shows lots of promise and operators should continue to trial it. Nextel will still invest time in testing that technology. The BRS 2.5 GHz band transition must continue to happen quickly. The FCC should modify the MEA requirements and make them a BTA requirement only. If done, Nextel will deploy Austin, Boston, and Washington DC right away. We need applications and devices, ease of use, technical maturity, and spectrum issues resolved.
Intel says broadband can be as a simple as just Internet access, or can be complex high speed mobile personal broadband -- both are different, but devices should address both types of network as they both will come.
Clearwire says we will go through the same metamorphosis as PCS/cellular: first coverage, then capacity, then applications, services, and content.
Nextel, customers like portability and portability will make this sector a lot bigger than a niche market.
Intel - as for spectrum -- likes 2.3, 2.5 and 3.6 and will see deployments emerge in ASIA more quickly than here. 700 will come about in time
Nextel says 3G UMTS, EV-DO, 1xRTT is coming so 4G needs to be more in the range of expectations of cable DSL and must be IP based.
Intel says 4G is 10 Mbps or beyond probably available in 2010, beyond 3G is a 1 Mbit service and that is what we are discussing today.
Nextel says that a proven and practical delivery model is based on having a robust ecosystem. Nextel is not trying to push any technology. They took spectrum and made it work, they bet on differentiation even though scale was a problem, they are in discovery, to understand what are the full capabilities and all the important factors. They will try IP Wireless now, and will trial WiMAX next, most likely. This is an opportunity for vendors now.
Sprint - Oliver Valente, CTO & VP Technology Development spoke at the Thursday noon keynote and had the following remarks. In his role, he leads all new and emerging technologies for Sprint’s global, converged, wireless and wireline networks. He is focused on features and functions of technology that compete and differentiate Sprint. He has been with Sprint for 15 years and serves as President of the CDMA Development Group, and is on the board of The Alliance for Telecommunication Industry Solutions. He will assume a new and expanded role of SVP Product and Strategy Development with the new Sprint-Nextel company. Sprint is a Fortune 50 Company has $43 B in assets, 26 M customers, $27 B in revenue in 2004, has top scores for wireless network performance quality and operation. Its wireless network had the fewest FCC reported outages for 9 years in a row. In the pending merger with Nextel, Sprint wants to create America’s premier wireless company. When combined Sprint/Nextel (S/N) will have 40 M customers, 40 K cell sites, 29 K retail outlets and $40 B in annual revenue. S/N will be able to complete a national footprint in the 2.5 BRS band with 220 M pop covered, 85% of the US population in the top 100 markets. Sprint is still the only company with an all digital CDMA network 85% of the US is covered, with 25 M customers. Their innovations include the first digital wireless footprint, the first wireless data network, the first 3G services in 2002, the first voice recognition capability, and they launched the largest broadband wireless network in the US using their 2.5 GHz assets. Sprint is very focused on deploying an EV-DO network. The plan is to cover 130 M pops by the end of this year and 150 M by 1Q06. Sprint wants to bring and integrate applications from premium content providers through key media alliances, using differentiated devices, with and a focus on usability and simplicity. Customers and Sprint are not focused on the technology, rather on the applications that help users save time, save money, have fun and be more productive. Some of the popular applications are messaging, gaming, ring tones, picture mail, and screen savers. In 2003 customers downloaded and used 7 M games, 20 M ringers, shared 90 M pictures, and uploaded 120 M pictures to share with others. There is a robust demand for wireless data services. Premium content providers provide “always on” entertainment, information, and communications services. They have provided 1000 ring tones, 300 screen saves, first to offer master recording ring tones, and clips of songs. Recently artist Sean Paul’s song “Just Give Me the Light” was downloaded as a ringer more times that the actual hit single. This is a telling point in the industry about how people want to use digital services. There are 200 games in the Sprint catalogue. Messaging partners include AOL, MSN, Yahoo, and EarthLink for access to email and instant messaging applications. People want convergence – wireless, wireline, consumer, business, service sets are coming together. S/N will differentiate based on a converged experience. It will be customer access to applications whether using wireline broadband, a dialup, WiFi, or broadband wireless at 1.9 and 2.5 in the future. Sprint is well positioned to take advantage of wireless data. 70% of the market has not yet purchased mobile content. This is a really exciting opportunity for the wireless industry to take advantage of. This is the fastest growing segment in wireless – data. The Yankee Group is projecting a 250% increase in data from 2005 to 2009. Wireless high speed data users will outnumber HS fixed data broadband users by 2007. Sprint’s data mix ARPU is 10% of overall wireless, and that’s higher than others, so there is lots of room to grow. When you net it out, Sprint is looking at several applications at broadband wireless, wireline, interactive multimedia services; wireless video broadcast services, backhaul services, and the abilty to have T1 replacement services. They are exploring these services with differ applications and devices. In wireless data leadership, Sprint has deployed 14 markets of 2.5 GHz broadband, the EV-DO deployment in progress, leadership in the BRS rules changes, and 2.5 GHz trials to refine knowledge and test concepts. In terms of the new BRS rules leadership, Todd Rowley is chair of the WCA Government Relations committee. Sprint is interested in “spectrum grooming” and to expand the spectrum positions in markets they don’t have. They are interested in standards development, and to form an ecosystem for the 2.5G market. They are working in the 802.16 WiMAX space with the chip vendors of Intel, Motorola, Fujitsu, TI, and with equipment vendors such as Lucent, Nokia, Samsung, and Motorola. The key needs at 2.5 GHz are, the need for open standards, for a world wide ecosystem, and harmonized spectrum policies around the world. For mobile systems, we need to change the cost curve and gain a 10x cost advantage. The 3G space will be a strong growth space for data, but Sprint wants to offer a completely different service at 2.5 GHz, not totally mobile centric. Sprint is partnering with Motorola to further the development of 802.16e by testing new radios, antennas, and multimedia devices for customers. That collaboration will spur 16e growth. Nextel announced a trial with IP Wireless in DC. S/N is interested in multiple technologies facilitating the business case for wireless broadband services for a converged world. Sprint will maintain leadership in wireless data, and combined with Nextel their network will be good for a powerful portfolio of services for content providers, system integrators, MVNO operators, and other new telecom entrants for voice, video, and data, all converged, integrated, and differentiated. Sprint is exploring a dual mode 1.9 and 2.5 unit, but has reached no conclusion yet. It may be useful in the near term, but not further out. Sprint is very focused on growing the EV-DO network. 70% of the market has not yet purchased mobile content. Mobile on 2.5 is 2 to 3 years away yet, so Sprint can do some fixed and portable things at 2.5 GHz soon, but a broad and ubiquitous deployment at 2.5 is still in the future, maybe 2008. But there is still a large demand now for data services, so Sprint will keep rolling out new advanced mobile services on their PCS network as fast as possible. It will be complementary when they converge, and customers don’t care anyway. So they will do mobile now, and then provide totally new services, in 2008. How will Sprint and Nextel combine their networks? Coverage and quality are “table stakes”, so we will aggressively expand and fill in our footprint.
1.4 WiMax and 802.16x
1.4.1 Background
WiMax is an industry forum that will certify interoperability of multiple vendors’ equipment all implementing the IEEE 802.16[14] set of standards of broadband wireless technology. Targeted as a fixed (versus the portable or mobile) version of the standard is IEEE 802.16a, cleaned up and renamed as 802.16d, and later renamed again as 802.16-2004. Intel is spending several hundred million on promotion of WiMAX as part of their Centrino[15] advertising campaign and thus leading the charge in raising awareness among potential users that outdoor broadband wireless is the “next big thing”. Other chip vendors are Fujitsu[16][17], Wavesat[18], Sequans[19], and TeleCIS[20]. Intel launched its Rosedale[21] WiMAX chip in April, then just days later Fujitsu Microelectronics' chip launched. Wavesat began shipping chips around the beginning of the year, and Sequans Communications made news shortly thereafter. TeleCIS is planning to be the next entrant in this space.
1.4.2 Timing
WiMAX was founded in 2000 by several leading vendors in the broadband, mostly licensed-spectrum (as opposed to unlicensed spectrum) market segment. In 2004 the first 802.16 standard was approved, and Intel began making silicon – the Rosedale chip. In late 2004 and early 2005 vendors began integrating the chip into reference architectures and this summer vendors are lining up with the WiMAX certification lab, Cetecom[22] in Spain, for interoperability testing and certification. The most aggressive radio companies in the first wave are Aperto[23], Alvarion[24], AirSpan[25] and Redline[26]. These companies have announced alpha, beta and first office commercial trials and deployments and of pre-WiMAX in the 3.6 international bands. Their web sites have more details.
1.5 New Revenue Streams, Video and Frequencies
New revenue streams seem to be coming from the offering of data quality of service, VoIP and video solutions. New frequencies for video are emerging in the 700 MHz and 3.6 GHz bands.
1.5.1 Video
New developments since the last show included the emergence of commercial video-to-the-handset companies. One such company is KenCast, Inc.[27]. The CEO of KenCast, Mr. William E. Steele[28] indicated that video to the PDA or mobile handset is doable today. I asked if it were possible to deliver highly compressed video over a constrained wireless channel, to a set top box for home viewing, and he indicated that it is possible. A follow-up with this company is highly recommended. He provided a demonstration of the ability to have a large number of channels available for a market or user base, and as one of the users selects a channel to watch, it becomes “live” for other users to watch too, and delivered in a multi-cast manner that allows for efficient transmission over a radio channel. The number of channels that can be delivered live depends on the capacity of the radio channel. A method of delivery could be to fill up 80% of the channel with live traffic, and reserving 20% for trickle charging a cache in the set top box for later viewing or for channel surfing. A continuing dialogue with Mr. Steele is advised.
Another development in the video realm is the growth of the “IP Television” phenomenon. Mr. Lawrence Harte[29] is publisher of IP Television magazine[30]. It reviews the latest in IPTV products, technologies and applications. Mr. Harte indicated that the next killer application is video delivered over IP networks. He believes that particularly RBOCs will be taking advantage of this capability, and with it, will come out ahead of even Cable companies, if they implement it correctly. He is very interested in the ability of wireless networks to deliver video and television and would entertain a discussion at anytime with operators interested in this possibility.
Also, Axcera[31] the manufacturer of IP Wireless[32] technology, demonstrated DBV video at the show[33], but I did not get a chance to witness it.
1.5.2 Video Spectrum
In the area of new spectrum coming available for video, the 700 MHz band may be of keen interest to operators.
Mr. Charles Townsend, CEO Aloha Partners, described the 700 MHz spectrum for video as “one of the last big wireless opportunities for entrepreneurs.” Propagation is better at 700 MHz. The market is projected to be a $23B business, now it’s a $5B market for high speed wireless Internet access. VoIP is a hot topic, and at 700 MHz it’s highly mobile. Qualcom is big on IPTV, and is showing video to cell phones, so now we can watch CNN, ESPN, MTV and other content on our phones, in chunks of 2 to 5 minutes, for about $15 per month extra. If you can wait two to three years for the upcoming 700 MHz auctions, and if the government auctions off MTAs and BTAs, this will be as big as PCS was 10 to 15 years ago. The first big application is portable broadband wireless. One can move around and get high speed Internet anywhere, home, office, airport, taxi, anywhere you can get a cell phone call now. Lots of new entrants are looking at this: Cable Companies (Time Warner, Cox, and Comcast), Satellite (DTV, Echo Star), ISPs (AOL, EarthLink, MSN, etc.) and CLECs (Alltel, Covad, and Broadwing). Without a last mile solution, ISPs are literally out of business in ten years. It’s interesting that AOL purchased Time Warner, and will be out of business in ten years. Most of these players have not figured it out yet, but broadband access is important to their survival, and 700 MHz is better than 2.5 GHz or even 1.9 GHz. The second big application is VoIP. With the IP protocol, exciting mobile VoIP service will provide a low cost delivery system in direct competition with cellular carriers, it’s on nobodies radar screen now, but it’s very competitive to Verizon, Cingular, etc. In 5 years, anybody with a broadband network can shift to voice if they want. Lastly the third big application is video to the cell phone or portable device. Qualcom is interested in this. They have more spectrum than Aloha at 700 MHz (Aloha has a bigger footprint). TV and video to cell phones is big. Not everyone wants it, but about 25 million people want it right now, this business is bigger than the entire cell phone business of 1993. Media companies want to deliver their content outside traditional channels. So, three big applications to look at: portability, voice and video. And at 700, this is the place to be. 700 can cover four times the area that 1900 can, and 10 times the area of 2.4 GHz networks for the same money. This means that you can compete with a $150K site versus a PCS $600K site across a network. Low cost wide area coverage is possible. At 2.4 GHz the cost to deploy a hot zone is $1.5M for the same area. With this, the average cost per user for network equipment alone is $2000 per customer. We see no economics at unlicensed 2.4 GHz versus 700 MHz. Use 700 or maybe some 1900 which is coming up for sale in the next few years. We believe we can deliver video in our 12 MHz of spectrum and we have enough capacity for 3 to 4 years before we have to cell split or purchase more spectrum. In rural areas we can go indefinitely. The spectrum coming available is in blocks of 10, 20, 12, 12, and 6 MHz so you can pick up as much as you think you need. If big guys don’t show up, we can get this spectrum cheap.
1.6 Capital
There was no big Nokia or Intel capital presence at this show to my knowledge. Deutsche bank however provided telecommunications and emerging technology group investment people to the show. A panel on financing opportunities in broadband wireless was held and two of the panelists were Mr. Edward Dunn and Mr. Perm Parameswaran of Deutsche Bank and others. Some remarks from various panelists included the following. The investment community does not like single delivery platform operators, but end to end and multiple services offerings from an operator look good. There is a risk of over entry and one needs to critically look at the competition on a per market basis. We don’t want the problem of 37 CLECs serving the same geography. And for broadband, if there are five competitors, that will affect everyone’s profitability negatively. So look for opportunities to be first in a market. Unfortunately it will take the next 18 to 24 months to see who, in hindsight, picked the right strategy. Business plans brought to VCs need to answer the question: Can you operationalize the business? What can you do today that is competitive for a period of four to six quarters and is then sustainable for the next 12 quarters? Questions we ask are: What if the standard for DSL or cable moves to 25 Mbit? Or, what happens to your business plan if EV-DO or other PCS digital high speed mobile access is fully deployed? In this new industry no one has any real traction yet. You need to show you have operational experience and you can extrapolate that to scale your business. There is an absence of that experience in broadband wireless business plans today. The good news is deals are getting done. The bad news is you have to snow operational experience and success in real markets to get the deals done. It is not just the technology. This is new for everybody; it’s the wave of the future. You can’t show investors this huge capital requirement of the next five to ten years. If there is a gap anywhere in your plan, there will be problems. If your aspirations are too big, it won’t work. If your show a two market plan, a five market plan, or maybe a 30 market plan then that is likely ok. An example of risks to investors is what happened to the early CLECs. For example McCloud went from 7 to 14 states, if it had stayed within the early scope, it would have been a profitable company. The plan got out of control. That’s the only risk is plans the VCs have seen, they get out of control.
1.7 Spectrum
I looked for opportunities in spectrum excess or spectrum for sale, and spectrum for new bands, particularly the 3650 to 3700 band, its uses and equipment for it. I found the following.
1.7.1 Spectrum Marketed
There is a new service for marketing and bidding on spectrum, called the Cantor Spectrum Exchange[36]. It is a website that will have mapping and analysis of spectrum and tower assets, it will be the largest private trading site on the planet. They plan on bringing buyers and sellers together. They don’t take any title on spectrum, rather they are the brokers. There are lots of spectrum bands available. They will focus on the 60% to 70% of the most common bands and the most common aspects of typical transactions, and help the buyers and sellers on the technology, legal, and regulatory aspects. Cantor clearinghouse can hold payments, so for example a seller may react differently to an indicative buyer versus a real buyer with $1M in escrow at Cantor. Analysis features of the site will include site maps, demographics, geographic boundaries, and license boundaries. Trades can be under real or anonymous names. On the buy side, users can register profiles and will be notified of anyone posting sales. Users can create a listing, search for spectrum, keep track of trades, profiles, and get legal and regulatory documents. Cantor is working on standard files for standard transactions, and business solutions by frequency. They take in FCC data weekly and integrate it into their database. Sellers can search on what assets you have registered with the FCC. The exchange will show contours of station signal strength, financial information, bid offer map, pictures of the assets, and comparables on a dollars per pop basis. Before it goes to the trade engine, sellers can assemble all this information and post it, all buyers are then notified when available. The exchange does the same thing for towers and roof top space, users can buy or lease these assets, it will show ASR numbers for towers, with location, latitude and longitude. FCC/FAA database information is there or you can put in your own information, if not there is no government information, or if the government database is not accurate (the buyer and the seller is responsible for accuracy, not the exchange, acting as a broker). Cantor is not doing the legal transaction, but providing a standard legal and regulatory framework with forms and a streamlined process. Buyer can see most all spectrums or assets in his geography of interest and activity. Lessors or lessees can search for a band in a region. There are two types of listings, active and non-active. Buyers can find out if an asset is available and if so, what it costs? A Cantor call center calls owners of spectrum and asks if they wish to list spectrum in the exchange, and if so, at what cost? There is a huge response and a large backlog of return calls to place, as there is so much interest in the exchange. The law firm Wilkinson, Baker, Knauer and Mr. Jonathan Cohen, Esq. is assisting Cantor do routine and streamlined forms to allow for a more liquid market for spectrum. The forms are standard, but there will always be individualized elements to each transaction. The forms for spectrum, tower, roof top leases and sales will be commercially reasonable for both sides. If the FCC streamlines their process, for example ULS overnight approvals for some routine license transactions, the market for spectrum will be more liquid. In most cases carriers may need regulatory review, and in all cases some due diligence is required, the exchange is not going to warrant the conditions of the license or the tower, it’s the buyer’s responsibility. The exchange is a promising vehicle to study spectrum availability and check pricing without incurring any cost until a transaction is completed (then 2% to 3% or so is the expected fee).
1.7.2 Spectrum at 2.5 GHz – BRS/EBS Spectrum
The Broadband Radio Service (BRS) and Educational Broadband Service (EBS) (the old MDS/MMDS band) is in the middle of a “false start” given that the FCC pulled the trigger for transition in January but there have been no real transitions take place yet, but for informational talks, to my knowledge in the band since then. The biggest issue is that the FCC has created a firm deadline for transition but proponents must transition an entire MEA (Major Economic Area) versus a smaller Basic Trading Area (BTA). What follows is information from a panel on issues in the band, with participants from industry, operators, and a member of the FCC. The first, issue is interference and how to handle it before, during and after transition (given not everyone is starting at the same time). The new band plan specifies new geographic boundaries and height benchmarking to allow operators the ability to deploy with or without cooperation of neighbors, and if a mover is under his height benchmark, he will not be required to correct any interference issues that may arise. Out of band limits for station equipment and CPE have been issues, but if your equipment is software controllable, you will likely have no problem. If your equipment is the kind where it is hard to change (channels, etc.) take a close look at these restrictions. Canadian and Mexican border issues and quiet zones in parts of the country are important to consider. But all these are manageable and controllable so don’t let that stop you from deploying. Anybody can and should start now. With geographic licensing, people should seriously consider deploying now as it is much easier than before to build in this band. The transition area size, an MEA, where there are only 52 in the country, is a challenge to transition for a proponent, even for major players. The base licensing area has always been a BTA. Nextel and 20 other petitioners seek change to the requirement that it go to an MEA. Nextel wants to think about economy of scale for massive deployment and needs to transition bands fast. Nextel suggests getting rid of the MEA requirement, and if so, they will deploy Austin, Boston and Washington DC BTAs right away. For example, the Austin MEA has 11 times the people and 27 times the area versus the Austin BTA. This is a Massive difference and much larger undertaking. Nextel wants to make mistakes on smaller areas; learn at the BTA area level first, before tackling the whole MEA area. Rules have been in effect since January and there is no rush to transition on an MEA basis. Now the FCC can use the BTA area concept from Rand McNally with no licensing problem as before – that issue has gone away. In petitions for reconsideration, the commission’s ruling that an operator can exceed the field strength at the border if the adjacent neighbor is not operating (yet) has drawn lots of heat. The rules now allow early movers to deploy without meeting signal strength on the boundary and go as far as they want into the next boundary. This is not what was suggested by the coalition band plan. Sprint wants to ensure interference free deployment, so how can an operator deploy with this ruling, and reduce interference and not have today’s overlaps, with a no-man’s lands, useless coverage, resulting in an almost “unlicensed” environment. A balanced approach reduces interference, gives maximum area, but no overlaps. When a new provider comes on line the subscriber may have to change providers. If this happens the later operator will have to call the other operator, insist on changes, and this will cause problems. The other operator will not want to change or shut off the system, and the customers will call the provider, and then the FCC. All operators must look at signal strength and if they violate the guideline do so, on non-populated areas. Rules for co- and adjacent-channel are all subject to violation with consent of the parties. These are fall back rules for folks to deploy in the absence of some type of interference agreement between neighbors. They are not perfect, not ideal for a perfect world, so there is incentive to work with a neighbor, or if the neighbor is uncooperative, it gives the ability to still deploy. When deploying now, what do you talk about? Start with your GSA, look at populated areas and prey they are in the center of your GSA and if so, you are in good shape, limit height of towers to PCS levels -- 100 feet or so. But if you have coverage needs on the edges of the GSA, have multiple towers, if your population is on the edge, and/or if the terrain is high or hilly, so that your tower height is significantly above the surrounding terrain (even though your tower might be short), then you might have serious issues and must look much more closely at the situation. When the GSA is shaped artificially due to lots of old BTA and PSA overlaps and there is population there, then you need to talk to your neighbor to coordinate a design that minimizes interference. The proceeding requires that one must show interference before needing to coordinate, but Nextel says one should talk as soon as possible, the fact that others must first suffer interference and show it, is not good for subscribers, it’s after the fact. The bench mark guideline allows the prophylactic measure needed to deploy early, without neighbor consent. The Charlottesville area sees down into the Washington DC area. So a transition that forces Charlottesville operators to transition Washington DC is not good as it will cause a shut down or cost lots of money to deploy to allow others to transition. The WCA had to draw a delicate balance. Systems on top of mountains may cause problems hundreds of miles away, so look at operating on lower towers. Operators can pre-transition under the current rules that don’t have a lot of co-channel neighbors and have good contiguous EFs, ABs, and CD spectrum blocks in favorable positions. But in major markets like Chicago, or St. Louis, or Phoenix, Sprint would like to move the EBS licensees to the mid-band. Sprint would not want to keep them in the pre-transition phase for long, and wants to transition high power into the mid band. All operators want to set a timeframe of 21 days or so to respond to a transition request for basic information. Need some consequences if a neighbor fails to respond. Folks have known about this since Jan 10th so people should be getting ready to talk by now. What should operators be doing now to prepare for the transition process? Talk to neighbors about interference. What’s the best way to live cooperatively in the shared neighborhood? Know how many receive sites are in the transition geography, will neighbors migrate data video services, will they migrate them or just offer services on the new systems, know the geographic areas where you both have population. If it’s an MEA one has to look at, the problem is compounded – no relationships now exist beyond the BTA. Is anyone talking to neighbors about exceeding interference? No. Sprint has not received many formal requests to exceed height or signal strength limits, however some informal discussion on new technology have been received. However there has been no movement to build a model plan. The Nextel IP Wireless Trial in the DC area will be an example of how to make a new technology work for a nationwide deployment. Consultants can help craft the documents that go back and forth between neighbors. As the transition starts and markets start getting deployed, people have to talk. No one in the audience has struck interference agreements, to agree for example that one side can violate “these channels” and the other side can violate “those channels” and thus allow is to serve customers on some of our channels while the others with interfering spectrum are used more in the interior of our area. Dual spectral mask issues are also confusing, and we are debating when to use one of the several masks: 47 + 10 log P, 67+ 10 log P, and 55+ 10 log P. Fixed receive site non mobile uses 43 + 10 log p, with documented interference we can enforce 67 + 10 log p, or if within 1.5 km. If collocated must be protected to the noise floor (this is difficult), for mobiles we must be 43+ 10 log P at the channel edge, and 55+ 10 log p, 5.5 MHz away. Problems of compliance come up; indoor units with outdoor antennas are springing up by enterprising contractors or owners. One in ten will need an outdoor antenna, then operators must go from 43+ 10 log P to 67 + 10 log P. Filters at the CPE may be a big issue, not too much of a problem at the base. We need a rule such as “above 20 feet put in a filter, below 20 feet leave it off” as interference is unlikely. As for the transition process – It is simple in some respects. Give EBS new down converters and move them to new channels. Why did it get complicated? SBC wanted multiple proponents per MEA (they don’t even have a license – they likely want delay and confusion.) One reason no transitions have occurred is likely because we have to bring in all parties. “The perfect is the enemy of the good.” The idea is, one proponent that takes on the burden of transition. There is no way to game this process other than delay. There is nothing a proponent can do to disadvantage other operators, except delay, so the need for multiple proponents is absurd. A proponent simply has a task to do: down converters to the EBS licensees, and move the video programming to the new channels. How does it hurt to have only one proponent? Also nothing says a proponent can’t bring in another operator. Need to keep the transition process tight, with no loop-holes, and a need for timely information responses to the initial request for information. We need to know a timeframe, set milestones and deliverables and be done with it. Sprint learned a lot in the PCS microwave relocation and would like to see fixed amounts for common items to charge. In the microwave relocation Sprint spent lots of dollars arguing over relatively small amounts of monies. It would be good to know up front the cost of common items (down converters, installations, etc.) to add certainty to the writing of business plans and operation of the business. Regarding the timing of reimbursements, Sprint would like to see it happen once you commence commercial operations versus when the transition is complete. Setting any rule saves money in the long run. The irregular shapes make pro-rating payments difficult. The only reasonable surrogate is the MHz-pops-covered metric (this takes into account number of channels, population, etc.). Apportion payments out that way. It’s not a perfect surrogate, but it will work and is clear. Safe harbors were designed to eliminate disputes during the transition process. How do you treat an EBS licensee that has multiple programming tracks on its current four channels? – You either give them multiple channels in the MVS or digitize to give multiple items. What to do when a four channel group is split. These are situations that occur often enough that the trade groups felt it would be helpful to have rules. Self transition – Given that the FCC gave a hard deadline for transition in a market, an operator can transition himself as a last ditch effort if no proponent comes on the scene. Then the license is safe, it won’t get thrown into auction. (By the way, the coalition proposal had no deadline, so under that scheme, some legacy areas may never transition, and that would be good if the operators there wanted it). What do you do if no one transitions my market? Where a proponent exists, a self transition guy might disrupt an overall plan of a proponent that has not yet come forward, so Sprint and Nextel do not favor self transitions. Where a proponent exists self transitions are not needed. Regarding moving forward on auctions -- moving forward on EBS white space, forfeited licenses, spectrum thrown back into a pot for bidding credits -- What do we want? Sprint wants EBS white space issue done -- auctioned off soon. Nextel wants to wait till transition is complete Sprint wants it done before. Auctions for more BRS operators are ok, so that we add more potential proponent(s). For EBS white space, the whole point is to transition, so the last thing we want to do is have more legacy equipment to transition, so hold off on this. As soon as transition is complete, then worry about EBS white space. Another view is to auction it soon to eliminate the risk of suburban or urban white space that muddles the water regarding interference protection. Who will own it, will they cooperate, etc. Could auction EBS white space but not allow deployment until transition is complete for those areas. The WCA proposed to auction EBS with the proviso that people cannot build on it, and they know that going in. The FCC concluded that the agency wanted to balance several goals, rollout broadband wireless widely to Americans by 2007, utilization of the spectrum, and preserve the educational nature of the band, how to design incentives, how to deploy sooner rather than later, and how to keep service going pre-transition.
1.7.3 Spectrum at 700 MHz – Broadcasters Spectrum
For more on 700 MHz, we listened to Mr. Greg Smith, VP LIN TV Corp, a 700 MHz licensee, who made the following points in his session on the DTV transition. In 1987 a petition for HDTV was first proposed by congress. LIN TV had built its first digital TV signals seven years ago so they have lots of experience with digital television. They are now interested in the 700 MHz auctions because of LIN’s cellular phone heritage. They have TV stations in the lower 700 MHz, channel 59 analogue and channel 54 digital and they are now holding this spectrum. FCC started work on DTV in 1987, and in 1995 adopted the 15 year give back timetable, which would be about 2010 and is close to what we are still looking at today for the digital TV transition. In ‘98 the FCC adopted transmission standards, and started to allocate specific channels to specific markets, and started coming up with the new table of allotments. But the Telecom Act of 1996 came, and along with “auction madness” created the “soft give back date” of 2006, or when 85% of the households have DTV. This number was pulled out of thin air. The dates were set by the budget committee. Now looking to repack 2 to 51, so another 180 TV stations channels nationwide are looking to be taken back and their spectrum sold. Broadcasters have lost 40% of their channels, going from channels 1 though 81, now only have channels 2 through 51 left. Since the dates for transition were so far out, the recent spectrum auction did not get good response. Also the FCC kept putting off the date, since it was a “thin air” date anyway. So they postponed all auctions but the few that occurred two years ago for part of the band. It’s an extremely complicated process to vacate the channels, and broadcasters have not come as far as most people want. There are extensions for 34 stations due to not having new channels been given to them yet, mostly due to problems with Canada, Mexico border issues, but also problems in NYC due to lack of channels. The broadcast industry is interested in moving forward. They do not want to spend money on dual transmission of old analogue and new digital, as they are now, with no premium for that from the content providers. Bills are now in congress and the senate. The hard date still seems to be 12/31/08 or 1/1/09 but they are eliminating the 85% criteria. Issues the bills are struggling with include what to do with the 35 to 75 million analogue sets not connected to cable or satellite today, receiving programming over the air. This includes 10% to 15% of households that have only over the air television. Many more households have a second or third television that only receives over the air broadcasting. These sets will need a converter box. These numbers depend on the hard cutoff date, the sooner, the more, the later, fewer are affected. One bill wants to auction off spectrum in ’08 to get moneys for public safety interoperability by ’09. Cable companies might themselves only be 57% converted to digital by the ’09 or ’10 timeframe which leaves 10’s of millions of sets that will need converters. A government subsidy will be needed to provide those $50 converter boxes. We are still selling 20 million analogue sets per year. One bill has no subsidy in it. A bill will pass this year, due to budget imperatives, but the industry does not want another fake bill, with a fake conversion schedule, inadequate subsidy, and no public relations campaign to get people moving quickly, before a last minute rush, that will likely slip the schedule yet again. The subsidy needs to be $2B to $3B, and that is reasonable in light of a $23B industry.
1.7.4 Spectrum at 3.6 GHz – Government to Commercial Spectrum
The FCC recently opened up spectrum at 3.6 GHz, the following companies described opportunities and challenges of the band.
· Redline (Mitch Vine, Director Marketing)
· Airspan (Paul Senior, VP Marketing)
· Intel (Peter Pitsch, VP Public Policy)
· Aperto (Manish Gupta, VP Bus Dev)
The discussion followed along these lines. The 3650 Band had an NPRM issued by the FCC two years ago[37] Last year, the FCC issued a subsequent NPRM[38] and in March of this year, it issued a Report and Order, Memorandum Opinion and Order.[39]. From that have come petitions for reconsideration in the last few months. Jim Schlichting, FCC Deputy Chief, of the FCC Office of Technology and Engineering, provided the following information. The 3650 band is used by about 80 Fixed Satellite Service (FSS) and grandfathered Federal Radar stations across the country. The band offers low entry barriers (no auctions or large fees), while assuring good interference protection to FSS and FRS licensees. It’s a quasi licensed service, in an unlicensed regime, meant to protect FSS/FRS, there is a fixed site registration process to facility interference coordination, and there is a duty to cooperate. Interference protection to FSS stations is to 150 km around each FSS licensee. Entrants need to negotiate with each operator before commencing operations. The regulation enabled mobile operations using transmit enable signals from the base stations and with limits on mobile power, and with mobile to mobile permitted. Higher power that in part 15 is allowed, up to 25 watts per 25 MHz. Mr. Paul Senior, of Airspan indicated that 70% to 80% of their revenue comes from this band (3.3-3.8) worldwide, so they speak from experience. Best effort Internet service is not of interest to carriers today. Carriers need QoS for VoIP, and reliability. Mr. Mitch Vine, of Redline, indicated they were very interested in the band, had built a product and wants to provide it to rural and suburban Wisps for high-speed backhaul and point to multipoint access. He said they are ready to ship but wants the rules to change and be more close to those of the international bands so that Redline can quickly adapt to this band from international types. He sees four main issues to resolve: 1) eliminate the contention protocol rule, 2) increase the power allowed, 3) review how to work with the earth stations versus operators, and 4) how to quickly resolve this and allow commercial manufacturing and operations to begin. For Intel, Mr. Peter Pitsch, VP Public Policy, wants what Redline wants, wants rural wisps to quickly use the spectrum, to eliminate the contention protocol rule as it is a poor solution to scarcity (you will still end up with the “tragedy of the commons”), and suggests that the solution be to issue two 25 MHz licenses for carriers to operate in the major markets and offer QoS. Aperto’s Mr. Manish Gupta, VP Bus Dev, said 80% of their revenue comes from 3.5 band, and that service providers should be able to provide QoS for multiple users. In petitions for reconsideration, Motorola proposed the whole band be licensed. In an Alvarion, Redline, and Intel proposal, they proposed two 25 MHz blocks licensed exclusively in the top 50 metros, the WCA proposal suggested two 25 blocks, one licensed exclusive everywhere by BTA/MTA, and one under the current regime everywhere. Contention will not meet the industry needs. FCC in March wanted the industry to come up with an acceptable approach or a totally different approach. FCC is open to alternatives through the petition of reconsideration process. The FCC wants to clarify that the technical solution to a contention based approach is flexible, not necessarily the approach taken by 802.11. A panelist indicated that the IEEE is looking at WiMAX changes to incorporate a contention based protocol mode to make WiMax compatible in the regulatory regime. A contention based protocol, or we can call it a cooperative based protocol, still does not solve the scarcity issues in the cities. The only way to handle scarcity is through licensing. Maybe drop contention everywhere so rural can get it quickly. This particular spectrum band is very valuable since it’s a global allocation.
1.8 Summary
Personal broadband is now a buzz word in our industry. Vendors may consider positioning itself as driving the industry toward mobility, portability, multiple devices and an ecosystem of partners around which operators can rely for a choice when the market finally decides what “personal broadband” will be, when it will come, and how big it will eventually become.
WiMAX is important. It would be advisable to promote more clearly, whether or not a vendor is in the first wave of WiMAX vendors and what others out there are on the “short list” to look at.
The “scaleable” base station idea has some attraction, and a low end starter version may have some appeal for light, rural, first, or trial type deployments.
Small operators are tentatively interested in expansions so something small that they can “trial”, may be of interest.
Big operators want standards, an ecosystem, and generally a “slam dunk” business plan. So ways to show them what has worked around the world with other equipment customers may be advisable. Also, small operators indicated that mobility accounts for less than 10% of their business and business prospects, but major carriers talk about mobility interest is in 40% to 60% range. So clearly a strong mobility message to the majors while a softer approach for smaller operators is indicated. Thus, it is important to show smaller operators what the portability and mobility revenue streams are, and how to capture them. Nextel says they will probably trial WIMAX next – this is a key strategic opportunity for vendors. S/N is looking for a completely different service in the 2.5GHz band, not “mobile centric”. There is an opportunity to help them define that, as I am not sure they yet know what they want themselves. So again, something that is emerging from small operators or somewhere in ASIA, or someone’s “garage invention,” might be the key that S/N is looking for.
Aloha indicated they can deliver video in 12MHz of spectrum. It would be interesting to find out how, what, and if their model is good for video over wireless.
For entrepreneurs, influenced by venture capitalists, it is recommended that vendors show how to differentiate from cable/DSL providers (again portability and mobility revenue streams), and other competitors in the market.
For BRS operators, be sure equipment can be transitioned quickly (power, mask, frequency agile, etc.), and prepare a simple checklist for BRS/EBS transition. Operators do not understand this, and it would be a great service (and door opener) for a vendor to explain it to them. Once the spark is lit, the transition process may go very quickly.
As for 3.6 GHz band, the considerable pressure to eliminate the contention based rule, based on “scarcity will not be solved in the major markets using a contention based rule” may be a good approach to take publicly, but a prudent alternative strategy would be to develop a cooperative proprietary approach and in standards that would solve the problem and get licensing/IP royalty via that channel, as it is something the FCC wants, may not be persuaded by the above argument, and may ultimately remain in the rules, and be important for a vendor to solve.
The show was an upbeat and positive show, showing growth, planning and anticipation of big deployments to come!