What That New Tech Acronym Means
Today marks the beginning of the government’s largest sale of wireless spectrum ever, and 139 bidders--from units of telecommunications giants Southwestern Bell and US West to start-ups such as WebCel Communications--are expected to pay a total of as much as $4 billion for the licenses in the long-awaited auction.
The companies hope to make that money back--and much more--by selling everything from Internet access to local phone and cable service to businesses and residents.
This group of competitors will offer their products over not-yet-built wireless networks using a technology called local multi-point distribution service, or LMDS.
Here’s a thumbnail sketch of LMDS and what it might mean for TV, phone and Internet customers:
Question: What is LMDS?
Answer: LMDS stands for local multi-point distribution service, which can send video, data or voice signals over a single wireless network.
Q: How does it work?
A: The network is set up much like a cellular phone network, with a series of transceiver “hubs” each serving all customers within the signal’s reach. The central office transmits its services (video, voice or data) using high-frequency radio signals to the hubs, which in turn transmit the service to customers outfitted with small nonmobile antennas. The same process works in reverse, allowing customers to use the network for phone calls and other two-way services.
Q: What equipment will residential users need?
A: For Internet and video services, customers will need a special set-top box and a small antenna that can rest on a windowsill.
Q: Who will sell the services?
A: The FCC will award 986 separate LMDS licenses, two for each region in the country. Companies signed up to bid for the licenses include units of Southwestern Bell and US West, but cable and local phone companies will be limited to smaller sections of the spectrum in their own territories. AT&T; and other long-distance carriers are not participating, but many notable wireless industry leaders are involved in the auction.
Q: What will the winners provide?
A: The FCC left the rules wide open, allowing the winners to do essentially anything they want with the airspace they buy. While FCC officials clearly hope LMDS will bring residents long-awaited phone and cable competition, most winners will initially sell high-speed data access and phone services to business customers.
Q: How much will consumers pay?
A: The pricing is not clear yet, because it depends on each company’s strategy, but Daniel Ernst of the Strategis Group in Washington believes the winners will price a package of services below what the wired carriers now charge businesses.
Q: Is LMDS available anywhere now?
A: The only LMDS carrier in the United States operates in New York. CellularVision currently offers only “wireless cable” and Internet service. The cable service costs $49.95 for installation (including set-top box and antenna), then $19.95 to $39.95 per month, depending on the number of channels. The Internet service costs $199.95 for installation (including a set-top box and antenna), then $29.95 to $49.95 per month.
Q: How soon are consumers elsewhere likely to see this service?
A: It could take the companies four or five years (after their networks are built) to tackle the residential market, Ernst said.
