Multichannel Multipoint Distribution Service
The success of DBS convinced telephone companies and other potential cable competitors that delivering digital video to consumers is a viable business. When such competitors analyzed the competitive issues with DBS, they saw that the lack of local content represented the biggest marketing problem.
Thus, some would-be competitors to DBS and cable sought to provide a wireless, multichannel video service with local stations called Multichannel Multipoint Distribution Service (MMDS), referred to by DAVIC as Multipoint Video Distribution Systems (MVDS). MMDS uses 198 MHz of licensed spectrum, which could support 33 analog TV channels, in the range of 2.5 GHz. This is low enough frequency spectrum to support transmission for 50 miles or more. With this range and capability to penetrate rainfall, this spectrum looked ideal for wireless local loop bypass. A number of carriers obtained licenses for spectrum, and a trade association was formed: the Wireless Cable Association .
Background
In 1964, the FCC authorized the Instructional TV Fixed Service (ITFS) for educational use. It eventually provided for 23 channels (138 MHz) in the 2.5 GHz range. In 1969, the FCC authorized the Multichannel Distribution Service (MDS) for two channels of pay TV. It used 12 MHz of spectrum at 2.15 GHz.
Later, the MDS operators learned the hard way that they could not make money with two channels. So, they went back to the FCC asking for use of the ITFS spectrum. The FCC agreed, and portions of the ITFS spectrum were used for pay TV. Combined with ITFS, MDS operators would have enough bandwidth to compete with cable, which in the 1970s could provide only 25 to 30 channels themselves.
However, as is often the case, bandwidth was not enough. The problem of MDS was access to program content. MDS operators could not get programs from cable at market rates. This gave rise to arguments about antitrust and unfair competition, but the MDS operators could not really make a go of it.
By 1990, cable had become ubiquitous, but consumers were complaining to the FCC and Congress about rising cable rates and poor service. The result was the Cable Act of 1992, which re-regulated the cable industry and was passed over the veto of then President Bush. As part of that Act, Congress forced cable content providers to sell programming to wireless cable operators at the same prices as they sell to the MSOs. The result was quick and beneficial to the wireless operators. In less than a year, ten wireless cable operators went public. These were companies that included Heartland, CAI Wireless, People's Choice, American Telecasting, and others.
The apparent success of what was then called MMDS attracted the attention of big telephone companies, who saw MMDS as a way to compete against cable for video services. TeleTV was formed as a consortium of Bell Atlantic, Pacific Bell, and Nynex to offer MMDS video and audio service in Los Angeles and on the East Coast. Pacific Bell began an aggressive rollout in Los Angeles, which was an ideal location for the service: Lots of people living on flat terrain made coverage easy. The incumbent cable operators had no digital plans. Everything looked great for MMDS.
Things began to crumble in 1996. MMDS spectrum was auctioned in 1996, but the income from the spectrum auction was a disappointing $216 million. One can argue that the auction results were hampered because Congress asked that the auction proceed too quickly so that the money would be used in the federal budget for the 1997 fiscal year. Had the auction been postponed until the glut of recent bandwidth auctions was clear and until certain technological improvements were available (as a number of FCC staffers suggested), the results might have been better. But postponement of the auctions would have postponed the availability of service. Again, a conflict arose because of different public policy objectives.
Then the bottom really fell out. In December 1996, Bell Atlantic had second thoughts and wanted to pull out of TeleTV. Then Pacific Bell was acquired by SBC, which showed no interest in MMDS. Digital satellite was selling well, and the phone companies thought xDSL or FTTx service could provide video. Bell South forged on by purchasing MMDS rights to 1.2 million homes in Florida from American Telecasting for $48 million in 1997. This amounts to $40 per home passed, which was really a fire sale.
The small wireless operators were left holding the bag. They thought their relationships with the phone companies were long-term, so they were busy raising debt and capital to roll out service. Their basic technical problem was that their service was still one-way and analog, when two-way digital service was needed. These operators needed to spend money to upgrade—perhaps more money than the telephone companies expected.
The result was a hapless group of wireless service providers who by 1998 were either bankrupt or whose shares were selling for pennies, when they were allowed to be traded.
In September 1998, the FCC passed a single rule that turned things around just as quickly as they had years before. The FCC authorized two-way service, which was previously barred because of potential interference problems from possibly hundreds of new transmitters. MMDS could become a two-way digital service rather than a one-way analog service. The wireless operators quickly jumped at the opportunity, and some began offering service. This is a partial list of initial rollouts of data services over MMDS.
| Carrier | City | Equipment |
|---|---|---|
| American Telecasting/WantWeb | Colorado Springs, Denver, Portland, Seattle | Hybrid |
| CAI Wireless | Rochester, Boston | Hybrid, GI |
| People's Choice | Phoenix, Detroit | Hybrid, GI |
| Wireless One | Baton Rouge, Jackson, Mississippi | Hybrid |
These operators ran out of time and money, and data was unable to save them. However, the cable-based technologies demonstrated by a Hybrid and GI passed a sanity check. Thereafter, Sprint and MCI Worldcom came to view MMDS spectrum as the media they needed to compete against AT&T and its newly acquired cable properties.
In April 1999, Sprint announced the purchase of People's Choice TV (Nasdaq BB: PCTV) for $103 million, lifting its shares from a 52-week low of a mere 16 cents to $8. PCTV service area covers 7.8 million potential customers in 10 cities, including Phoenix and Detroit. Sprint would deliver about 27 Mbps downstream, with a 3.5 Mbps return as part of its developing ION network, under which it intends to bundle local, long-distance, and data service. Sprint also agreed to purchase American Telecasting, Inc.
Also in April 1999, MCI WorldCom announced the purchase of CAI Wireless Corp. (Nasdaq BB: CWSS) for about $408 million. CAI emerged from bankruptcy in October 1998. From bankruptcy to $403 million in eight months—not bad even by Internet standards.
How ironic then, to note that MMDS, previously courted and then jilted by the RBOCs, would become a part of the interexchange carriers plans to bypass the RBOCs.
MMDS Architecture
MMDS occupies 198 MHz of bandwidth in the 2.5 GHz range. This frequency permits long-distance distribution. For example, MMDS services can exceed 50 miles from the transmitter tower. This was the architecture for analog wireless cable initially, with the idea of putting up a single tower and serving millions of homes.
The key technical difference between MMDS and DBS for video service is footprint size. MMDS footprint permits delivery of local content, which MMDS achieves by having local production facilities near each transmitter to insert local over-the-air channels and advertising into the national feeds. The result is a system that is basically identical with HFC. Figure 6-3 shows a schematic of MMDS service.
Figure 6-3. MMDS Schematic
Local content and advertising are acquired over the air, transmitted using MPEG compression and systems specifications and multiplexed with the national programming for local distribution to the viewers. MPEG enables digital multiplexing and thus is a key facilitator of MMDS. Data services also might be received from Web content providers. In this case, the information is in digital format but would require additional processing such as encapsulation into MPEG and address resolution before being transmitted.
After the programming mix is determined, composite programming is delivered by satellite or fiber to the MMDS broadcast tower. Generally, the MMDS head end and the MMDS broadcast tower are not co-located because the tower should be placed at a high elevation.
At the receiving site, a small microwave receiving dish a little larger than a DBS dish is mounted outside the home to receive the signals. A decoder presents the TV images to the TV set. Advanced units will be capable of decoding data for PC users.
The range of MMDS primarily is limited by line-of-sight considerations. In relatively flat areas, if the transmitter can be located high enough, the signal can reach more than 50 miles. Prime One, for example, provides MMDS in Los Angeles and Orange counties in southern California using only two towers. About 75 percent of homes will be capable of receiving MMDS signals reliably; the remaining 25 percent are impeded by line-of-sight problems. Prime One is the successor to Pacific Bell Video Services, which was part of TeleTV before SBC decided to get out of the business. In 1999, Prime One was acquired by MCI Worldcom.
The Prime One service has basic service consisting of digital TV and digital audio. Digital channels are encoded and mixed into MPEG transport streams at a digital video head end. The MPEG transport stream is transmitted over an OC-48 fiber link to the MMDS transmitter atop Mount Wilson. At an elevation of more than a mile, Mount Wilson is also the site of most analog TV transmitters in the Los Angeles basin. The signals are modulated onto the MMDS frequencies and are beamed out using horizontally polarized microwaves. This signal is transmitted over the entire Los Angeles basin and is strong enough to be received on Catalina Island, 40 km from the coastline and 70 km from the transmitter.
The hilly terrain east of Mount Wilson interrupts line of sight for parts of Orange County. To rectify this, the transmission from Mount Wilson is sent to Mount Modjeska in Orange County, which serves as a relay point to viewers unable to receive Mount Wilson signals. The signals from Mount Modjeska are retransmitted as vertically polarized signals, whereas the original signals from Mount Wilson are transmitted with horizontal polarity.
The horizontally and vertically polarized microwaves enable the two transmitters to have overlapping signal coverage. A dish tuned to one polarity will not receive signals of the other polarity. Polarity is a way to achieve frequency reuse and thereby increase the amount of bandwidth and coverage available system-wide. Divicom supplies the MPEG encoder, and Thomson is the systems integrator.
Southern California is particularly well-suited to MMDS. The Los Angeles basin is relatively flat, its tall buildings are spread apart, and it is densely populated so that a single antenna can reach upward of 4 million households. This makes infrastructure investment less than $20 per home passed. MMDS is the least expensive infrastructure built for broadcast video with local content.
However, with the advent of two-way transmission and data services, this model breaks down. Frequency reuse is necessary to have more frequency available, and the footprint size must be reduced so that return-path service won't get too congested. Therefore, as Sprint and MCI Worldcom move into the MMDS space, the architecture of MMDS becomes increasingly cellular and increasingly sectorized.
Another technical hurdle to overcome is the requirement for line of sight. Recent innovations permit the installation of MMDS consumer devices inside the home for single-wall penetration. Other devices can operate inside the home if facing a window. Indoor installation is a significant improvement over previous MMDS video receivers.
Equipment vendors active in this space are Cisco Systems (through its acquisition of Clarity Communications), Thomcast Communications (comprised of operating units of Thomson-CSF), Newbridge, Spike Technologies, Hybrid Networks, General Instruments, Adaptive Broadband, and others.
Challenges to MMDS
MMDS shares problems common to all wireless Access Networks, as discussed near the end of this chapter. The problems specific to MMDS relate to its recent transition from one-way analog video to two-way digital data. A product transition must occur while continuing to satisfy the embedded base, small as it is. MMDS operators must operate within a cell structure, and customer equipment will be replaced.
Secondly, the amount of spectrum for MMDS may be too small to compete against LMDS and wired infrastructure. Other spectra may become available, such as Wireless Communications Systems (23 GHz) and 38 GHz, which can also compete on a cellular basis.
Finally, MMDS faces competition from cable and satellite for video service.