Wireless Issues

High-speed wireless access has been a long time coming. It has been discussed for years, only to disappoint. It has been disappointing because the possibilities are so clear. These are instant infrastructure (no digging), facilities-based bypass of local telephone networks, and mobility. However, all wireless services are confronted by a common set of problems that have hampered the introduction of various wireless services, including cellular telephone.

Real Estate and Transmission Towers

Despite the technology required to make wireless work, wireless is in large part a real estate problem. LMDS and 3G have relatively small footprints, about a few kilometers in diameter. This means that tower and transmitters must be located in thousands of locations in the country—about 10,000 locations are necessary to provide coverage comparable to cellular telephone. Bell Atlantic Mobile, for example, operated from 1400 towers prior to its acquisition of NYNEX.

The first problem wireless service providers have is simply to find the space. Not any location will do; site selection is a complicated engineering problem. The second problem is to pay for the space. Frequently, property owners, aware they are suddenly sitting on a potential windfall, will exact what is called "greenmail" from the prospective service provider when selling.

Following prodding from wireless providers, the FCC issued a Notice of Proposed Rule Making in June 1999 that builds a public record to determine the regulatory latitude the FCC possesses to assist wireless carriers' access to roof space of buildings.

In particular, the question raised under the 1996 Telecom Act is: Does the FCC have the authority to impose nondiscrimination orders on real estate owners who have already allowed telephone or utility companies access to their buildings? That is, if a building owner allows a telephone company access to their building, must it accord the same access to a CLEC? In addition, the FCC seeks to develop a record on whether state and local rights-of-way and tax policies are having an impact on facilities-based competition. For example, local governments often impose rights-of-way taxes as part of telco licensing to help defer the costs of road construction. Fixed wireless carriers say that because they do not dig up streets, they should not have to pay these taxes. Do either state or federal authorities have preemptive rights or responsibilities?

In addition to property owners, municipalities also have obstructed the construction of new towers based on aesthetics. Another legal question is to what extent the state PUC or FCC have to preempt municipalities.

Wireless can also be deployed from free-standing towers. Such towers are owned by utility companies and even companies specialized in building and operating towers primarily for communications services. Such companies are now publicly traded. Among these are Pinnacle Holdings (Nasdaq: BIGT), WesTower Communications (Amex: WTW), American Tower (NYSE: AMT), and Crown Castle (Nasdaq: TWRS).

If transmitter space cannot be obtained in quantity, then deployment of high-frequency wireless technologies becomes more costly. As of this writing, all these issues are unresolved; when decided by the FCC, they will no doubt be litigated.

International Spectrum Coordination

Spectrum is allocated differently in different parts of the world. This particularly affects satellite systems but can impact terrestrial services as well. In the satellite arena, for example, Iridium uses frequencies in the range of 1610 MHz to 1660 MHz. However, these frequencies are protected by the European Union for use by radio astronomers conducting experiments in the 1610.6 MHz to 1613.8 MHz range.

Similarly, the United States has been a keen proponent of making additional frequencies available at 1176 MHz for Global Positioning Systems (GPS). However, the Conference of European Postal and Telecommunications Administrations (CEPT) points out that this frequency is currently being used by terrestrial aeronautical radio-navigation applications in Europe, and it could cost several million dollars to relocate the users.

In terrestrial services, there has been widespread agreement that 3G is a good idea, but North America, Europe, and Asia have each allocated a different amount of frequency. This can negatively impact the interoperability of 3G devices for roaming travelers. Furthermore, there is worldwide agreement that more spectrum should be allocated for 3G than what was previously allocated in each continent, but the amount of increase is contentious because domestic constraints govern how much can be added.

Competition from Cable and xDSL

Wireless will always be at a bandwidth disadvantage when compared to cable and xDSL services. This is because wired bandwidth can be manufactured; more fiber simply can be laid as demand requires. Furthermore, cable and xDSL are deploying ahead of LMDS, MMDS, and 3G. If bandwidth or time to market are more important marketing requirements than ubiquity or mobility, then wireless is a tougher sell.

Deregulation and Standardization

On balance, deregulation will let businesses operate more efficiently and will fairly price spectrum. On the other hand, by letting market forces dominate, a bit of uncertainly is created as standards are fragmented. This already is the case in the U.S. digital cellular market. The United States has CDMA and TDMA solutions, and roaming is more restrictive than in Europe, which has settled on GSM. The effect of openness and deregulation when competing against more controlled models from Europe remains to be seen.