NEW YORK-For about $2,000 per square mile, MCI WorldCom Inc. expects to launch multichannel multipoint distribution service systems able to give its fixed wireless customers data access at speeds faster than T-1 connections.
That is the vision the carrier is working to make a reality, John Stupka, president of MCI WorldCom’s wireless solutions division, said in a presentation here earlier this month.
If it succeeds, the Clinton, Miss., carrier may help dispel some of the negatives associated with broadband wireless connectivity.
“For years there have been a number of technical and business problems preventing a widespread penetration of broadband connections between customers’ premises and service providers,” the Personal Communications Industry Association said in its January “Broadband Alert.”
“Either it was too complicated or too expensive, and the benefits of deploying new networks combining just voice and video services seemed too low.”
MCI WorldCom will be able to adjust speeds to the needs and pricing plans individual customers want, Stupka said. Those wanting speeds of 1.5 Megabytes per second, faster than T-1 connections, likely would pay about $125 per month for the service. Those for which 200 Kilobytes per second is sufficient would probably pay about $40 per month.
“Installation costs of about $400 to $500 per household are pretty reasonable in the near term,” Stupka said.
“There is a significant need for this in residential areas. An even larger target for us are small and medium-size businesses, which in many cases are not served by either cable (television) or the local phone company.”
MMDS technology can be tinkered with in three basic ways to boost its capabilities and efficiencies, Stupka noted. Channelization allows for either dividing larger channels into smaller ones or aggregating smaller channels into larger ones. Sectorization permits the division of transmitter signals into multiple sectors. Cellularization allows the migration to a cellular architecture for the purposes of frequency reuse.
“A good portion of your expense in setting up a wireless network is not the radio but the towers and the power,” Stupka said.
“The cellularized version of MMDS has tremendous synergy as a cellular overlay.”
MMDS spectrum is derived from prior attempts to promote wireless cable television, which relies on one-way communications into the customer premises. “Two-way MMDS is still in its early stages, but the major technology vendors have been working with us for the last year,” Stupka said.
“Deployment began late, but we expect to be in 100 markets by late 2001.”
Today, MCI WorldCom is conducting trials in five cities. In Memphis, Tenn., Jackson, Miss., and Baton Rouge, La., the company is testing business access at speeds faster than T-1 connections. In the coming months, it plans to expand its trials to residential neighborhoods.
“In Boston, we are working with a multicell design for dense urban markets, and we will beta test customers with several packages in a late-year rollout,” Stupka said.
“In Dallas, we were working with Cisco (Systems Inc.) supplying premise equipment and Motorola (Inc.) providing systems integration, to use fewer cells and eliminate the line-of-site issue.”
Stupka formerly was chief executive of SkyTel Communications Inc., the two-way messaging company MCI WorldCom acquired in a transaction that closed Oct. 1. Four days later, MCI WorldCom announced a definitive agreement to merge with Sprint Corp. Like MCI, Sprint has been a major buyer of fixed wireless operators in the MMDS band.
In its 1999 fiscal year-end report, released in February, MCI WorldCom said both companies expect their merger to close during the second half of this year. To do so, they would need, among other things, permission from the Federal Communications Commission and the U.S. Department of Justice.
However, the Legg Mason Precursor Group, Washington, D.C., said in mid-March it expects “in the next several months the Antitrust Division of the Department of Justice [will] seek and win a court injunction to halt the pending MCI WorldCom-Sprint merger from proceeding, effectively scuttling this merger.”
Among the most salient roadblocks to DOJ approval is the fact that Sprint and MCI WorldCom have “fully integrated networks and operations” ranking in the top three in “several highly concentrated, interdependent markets,” Legg Mason said.
Another key issue for the Justice Department is MCI WorldCom’s lock on the Internet backbone network, notwithstanding its apparent willingness to divest Sprint’s Internet backbone.
Legg Mason said it believes the Justice Department “will conclude that opposing this merger is its best available option to protect competition in this key `new economy’ Internet backbone market.”
Furthermore, Scott Cleland, lead author of the Legg Mason analysis, quoted FCC Chairman William Kennard as saying the merger announcement “appears to be a surrender” that would not benefit consumers.
If this merger is blocked, the Precursor Group offered several possible results.
“MCI WorldCom could turn its growth-by-acquisition strategy on other industries like local telco or wireless. Remedying [its] strategic weakness in wireless could prove more costly now, given the market euphoria for wireless data … It puts MCI WorldCom back in the wireless musical chairs game chasing the fewer chairs available, like Nextel (Communications Inc.),” the analysts said.
Sprint, on the other hand, likely would become an acquisition target for other companies, possibly Deutsche Telekom, BellSouth Corp. or Qwest Communications International Inc., in Legg Mason’s view.
Federal action to block a Sprint-MCI WorldCom merger could have an overall “chilling effect” on combinations that require accompanying divestitures of certain properties, the Precursor Group said. Paradoxically, however, the same environment could also prompt domestic carriers seeking partners to pair with foreign suitors.
