Air NEXTLINK

NEXTLINK Prepares for LMDS Slam Dunk

Posted: 12/1999

Air NEXTLINK
NEXTLINK Prepares for LMDS Slam Dunk
By Gail Lawyer

In the same way Michael Jordan came to dominate the National Basketball Association, NEXTLINK Communications Inc., Bellevue, Wash., is warming up to become a commanding presence in the broadband wireless leagues.

Teligent Inc., Vienna, Va., and WinStar Communications Inc., New York, may have been among the first broadband wireless players, using their licenses in the 24 gigahertz (GHz) and 38GHz bands to provide high-speed data and voice services, but NEXTLINK is one of the largest rookies in the arena these days.

Using the local multipoint distribution system (LMDS) licenses it purchased during Federal Communications Commission (FCC) auctions in 1998, and those subsequently acquired in January 1999 from WNP Communications Inc., Earlysville, Va., NEXTLINK is poised to offer broadband wireless in 65 major markets.

With its licenses, NEXTLINK will be able to cover 95 percent of the 30 largest metropolitan areas in the country, says Christopher Whitely, project manager for Parsippany, N.J.-based telecom market research firm The Insight Research Corp.

The payoffs for NEXTLINK could be substantial. Insight projects in a report entitled "LMDS, MMDS: Fixed Wireless in Telecom Networks 1999-2004" that revenue for Internet and data transport via LMDS will grow to almost $677 million in 2004, up from just $21 million in 2000 (see chart below).

But NEXTLINK's plans to use its LMDS licenses goes beyond just Internet access and data services. There are a couple of scenarios, including the provision of both voice and data, which may play out, says Margaret Marino, NEXTLINK's vice president of engineering.

Because the LMDS licenses give the company more bandwidth than competitors WinStar and Teligent, NEXTLINK expects to use the spectrum to offer customers a larger pipe--anywhere from a T1 to an OC-3, says Marino. The A-band LMDS licenses allow NEXTLINK up to 1150 megahertz (MHz), compared to the 80MHz to 400MHz the competitors have. In the 17 markets where NEXTLINK controls both A and B bands, NEXTLINK has a total of 1,300MHz. The LMDS licenses will also allow NEXTLINK to create wireless subrings off its own fiber networks.

In fact, NEXTLINK's strategy is to use its wireless capabilities to supplement its fiber networks in 45 cities nationwide. The LMDS option will enable NEXTLINK to serve more buildings, less expensively and more quickly than by fiber alone. "When we look at the economics of bringing a building on with fiber, we have a zone that says if the building is within 500 feet [from the network], we can justify bringing that building on-net," says Marino. But in Los Angeles, where NEXTLINK has been conducting its LMDS market trials since August, buildings as far as two miles away can be put on-net economically.

Los Angeles will be the first market where NEXTLINK uses LMDS commercially. The company also expects to have LMDS service available in Dallas by year's end. 2000 will be the year NEXTLINK begins to prove its strategy on a more widespread scale. Throughout the next year, the company plans to fire up its wireless networks in a majority of the top 30 markets.

NEXTLINK had not selected an equipment vendor at press time. However, the company is working with SpectraPoint Wireless, Richardson, Texas, Wavtrace Inc., Bellevue, Wash., and Digital Microwave Corp., San Jose, Calif., for the Los Angeles field test. NEXTLINK is reportedly evaluating equipment from other, unnamed vendors, as well.

Industry analysts believe that when NEXTLINK finally selects its equipment vendor the decision will have a significant impact because the company is by far the largest LMDS provider in the nation. "Trends are appearing that will be bad for LMDS vendors," says Whitely. He says many equipment manufacturers may be left out in the cold. "There are more than one or two LMDS vendors out there," he notes.

NEXTLINK, too, believes it will have tremendous purchasing power because of the scope of its licenses and its plans for widespread deployment. That's an advantage smaller LMDS license winners won't have. "We've heard that what some of the other players are doing is trying to agree on an equipment vendor so together they can get volume discounts," says Marino.

At least one of the smaller LMDS license holders has selected its vendor for the initial rollout of broadband wireless service. Touch America, the telecommunications subsidiary of the Montana Power Co., Butte, Mont., is using Reunion, a point-to-multipoint broadband wireless access product from Nortel Networks, Richardson, Texas. We continue to watch the evolution of other vendors' products, says Liza Dennehy, Touch America's general manager for local access.

Like NEXTLINK, Touch America is using its 25 LMDS licenses to supplement the more than 15,000-mile fiber network it has constructed. Already, Touch America is using LMDS in commercial applications in Butte and Billings, Mont. Dennehy says two more cities will be brought online by the end of year. The remaining license areas--which span from Spokane, Wash., to Fergus Falls, Minn., in the north and Provo, Utah, and Ft. Collins, Colo., in the south--will be built out over then next year or two.

Most analysts claim the LMDS spectrum is most appropriate in a densely populated urban setting because the ideal distance from the hub site is no more than two or three miles. However, Touch America believes LMDS-based service will bring broadband services to smaller cities and rural areas that are often overlooked by fiber-based providers.

"What LMDS enables us to do is provide high-speed services to customers that may not have had access," says Dennehy. "We found that customers were starved for bandwidth because they don't have a lot of options."

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