NEW YORK-The promises of wireless voice communications as a landline replacement and of
mobile data as a significant wireless revenue generator are moving closer to fulfillment but remain a few years away,
chief technology officers of three carriers said at a recent seminar.
On the landline replacement front, the good news
is “backhaul and transmission costs are trending down to zero,” said Jeffrey Hines, wireless services
analyst for BT Alex. Brown Inc., New York, which hosted a “Chief Technology Officer Summit” last
week.
“(These) costs are trending down, but aren’t entirely there yet, to replace a wireline phone at the
minutes of use expected of a wireless user,” said Eros Spadotto, vice president of engineering and network
services for Clearnet Communications Group Inc., headquartered in Scarborough, Ontario.
“But costs (likely)
will drop pretty quickly in the next few years so that wireless will be competitive with wireline.”
The
Canadian carrier chose Code Division Multiple Access technology for its personal communications services network
because Clearnet envisioned wireless telecommunications as a landline replacement. In the company’s view, CDMA
offers advantages for in-building penetration, reductions in blocked calls and capacity handling designs that lend
themselves to this evolution of wireless services, he said.
However, Clearnet is waiting with eager anticipation for
several improvements pending on both the infrastructure and handset fronts, Spadotto said.
The first is an enhanced
variable rate voice coder that promises to deliver “13 kilobit quality at an 8 kilobit rate.” Second is the
fruits of labor under way at the CDMA Development Group and other standards-based organizations that would
“lower the noise floor so more subscribers can be added to a single cell site.”
Aside from network-
related considerations, Spadotto said he believes three of the biggest barriers to adopting wireless telephony as a
landline substitute reside in the handsets available today. Clearnet, which views Advanced Mobile Phone Service as the
“universal donor of wireless,” offers dual-mode, dual-band phones to its customers.
“We have
been negatively blessed with not as many choices as we’d like, and that keeps prices high. But 1999 will be a
breakthrough year, with at least six dual-mode phones at 1.9 GHz by the fourth quarter, with prices cut in half and
competitive with other (technologies).”
Besides competition, another factor working to lower handset prices is
development, by manufacturers like Motorola Inc. and Nokia Corp., of “base level chips that can be used across
all [radio-frequency] technologies, and this removes [Global System for Mobile communications’] cost
advantage,” Spadotto said.
Another item on his wish list for accelerating wireless replacement of landline is
“a docking station for recharging, so I don’t have to carry the phone around with me in my house … (for fear of)
losing [the handset] in the couch.”
For Alltel Corp., which offers a variety of wireline and wireless services,
the costs already make sense for wireless local loop deployment as a landline substitute in under-served rural markets.
However, marketing considerations need further review, said John Haley, senior vice president and chief technology
officer.
“We are kind of unique because we have PCS spectrum we can deploy in a [competitive local
exchange carrier] environment,” he said.
In rural areas, connecting a wireline loop to a single household can
cost about $7,000, as opposed to about “$1,500 in incremental capital spending, according to some analyses, to
roll out in the cellular world.”
Haley also said Alltel is examining the possibility of encouraging its wireline
subscribers to use their wireless phone as their wireline extension phone through low-rate, one-rate plans like those
pioneered by AT&T Corp.
“Alltel’s markets are in two- and three-tier cities, which aren’t under as much
pressure as major markets. There is a market segment, a valuable one, that is attracted to one-rate plans, and we will be
addressing that in the future,” Haley said. “Ten cents a minute is more competitive in the second phone
space.”
However, one cautionary flag waving before Alltel in connection with landline replacement by
wireless telephony is the ongoing wireline telecommunications migration toward data and away from voice
communications.
“As traffic becomes more data intensive, this will become more challenging in terms of
network planning … We have carved out spectrum for data, but it can be very expensive, and it introduces a lot of
uncertainties over usage.” Haley said.
“The key issue we get a lot of questions about is data. We’re a fast
follower, and we will focus our attention (first) on business needs … (although) a lot of the low-hanging fruit in vertical
markets has already been plucked.”
The data needs of business customers are the key focus of Advanced
Radio Telecom Corp., Bellevue, Wash. Offering commercial fixed wireless access in Phoenix, Portland, Ore., and
Seattle so far, ART plans to use its nationwide 38 GHz spectrum to provide these services in the largest 100 U.S.
markets within five years. Its initial deployment uses point-to-point technology, but it plans to launch point-to-
multipoint service later this year in some markets.
According to Hines of BT Alex. Brown, “There is
considerable debate in the public securities markets about the status of point-to-multipoint.”
ART already has
deployed this new technology in a network in Oslo, Norway, and it plans to deploy it “domestically in the July-
August time frame,” said Ron Olexa, executive vice president and chief technical officer of ART.
“It
does work,” he added.
Advances also are happening in traditional point-to-point microwave data
communications, which have required conversions from legacy systems to frame relay services or ethernet local area
networks.
“We are moving to new radio equipment that will automatically connect to the ethernet,”
Olexa said.
“We are looking to drive the price down to about $1,000 per customer. The first generation, which
we will deploy later this year, will cost about $1,500 to $2,000 and can support about 6 megabits per second per
customer.” Whereas mobile wireless telephony carriers are looking for ways to tap data communications, ART is
considering offering voice as an adjunct to its data services.
“At some point in time when the networks are up,
voice will ride free with a protocol conversion to change it into a series of bits for transport,” Olexa
said.
Barry West, chief technology officer of Nextel Communications Inc., was to speak at the BT Alex. Brown
CTO conference March 10, but he canceled due to “scheduling conflicts,” according to the company. His
absence fueled takeover speculation that caused the wireless carrier’s share price to jump $2.18 to $31 at the close of
trading that day.
Nextel, an independent carrier with a national footprint, has been rumored to be an acquisition
target for at least a year.
Rumors about Nextel also include the possibility that it might gain a new strategic investor,
enter new markets abroad or acquire new radio-frequency licenses.
