The race is on for spectrum control

Rethink IT, Nov, 2004

In the days when computing and communications were different worlds, the PC industry had little more than a passing interest in matters such as spectrum. Then, at the end of the century, we saw Microsoft, in particular, realizing how far wireless broadband could foster new and increased usage of its technologies. Its response, ploughing $1bn apiece into two broadband wireless start-ups, Winstar and Teligent, which subsequently flied for bankruptcy, was misjudged. But its reasons remain sound--it had seen the chance to drive new forms of communication that would be based on a Windows platform (even one included in a phone) and would create a new class of applications and consumers for Microsoft technology.

Now we see Intel, in particular, taking the same approach, promoting technologies that will drive the broadband wireless revolution and keep it focused on the Intel-based client device. Such strategies will inevitably blur the lines between telecoms and computer companies, as their technologies converge, so surely the next logical step is for the equipment providers and the spectrum holders to converge too if only so that the former can drive the evolution of the industry from within.

CHANGING ROLES

The next few years will nor just be a story of the uneasy accommodation of 3G and broadband wireless, it could also see a complete restructuring of the roles of the main players. Already, we have cellcos commissioning and designing handsets and talking, in South Korea Telecom's case, about buying their own phonemaker; we have computer technology companies, notably Intel, putting financial backing behind broadband wireless operator roll-outs; we have wireless companies that own both the spectrum and the equipment, such as Clearwire; and we have IT giants such as Cisco and Microsoft lobbying on issues of spectrum allocation.

Regulators such as the US FCC are becoming progressively more open to 'alternative' technologies that use unlicensed spectrum, or share licensed bandwidth safely for greater efficiency. This means that they are also becoming more involved with a whole new set of lobbyists and vested interests, bur despite all the recent progress, many of these interests are still frustrated with the slow speed of change and the conservative attitudes of the main spectrum holders. The likes of Intel lobby ever more aggressively for new frequencies for the wireless services that will boost their core business. Sub-lGHz for WiMAX is a prime example but last year a victory in less high profile spectrum showed the influence of Microsoft and Cisco, which were instrumental in getting the FCC to open up the 71-76GHz, 81-86GHz and 92-95GHz bands for commercial broadband wireless services. This is suitable for millimeter wave technologies, which can support super-high speed download. Microsoft says a full length movie can be downloaded in 10 seconds.

As the computer companies become successful spectrum lobbyists, they are expected in many quarters to take the next step of controlling such bandwidth themselves, ensuring that it can be used for the most beneficial purposes, as they see them.

Intel is already in the habit of supporting and co-funding spectrum holders to roll out WiMAX, most recently with the recent announcement of a partnership with Telkom, the Smith African carrier to trial pre-standard WiMAX gear for last mile applications.

FUTURE POTENTIAL FOR MOBILITY

Although the main focus is on filling gaps in DSL coverage for consumer broadband access, Telkom is also interested in the potential for mobility in future, as a possible alternative to both DSL and cellular towers in rural regions of the country, which lack significant infrastructure.

It seems only a small step to acquiring spectrum in strategic areas itself to ensure the rapid roll-out of WiMAX.

Some smaller scale players are already adopting new and more flexible business models. For instance, Californian WISP WebSky both operates pre-WiMAX networks in its own MMDS spectrum in the US, and forms joint ventures with spectrum holders in other countries such as Argentina and India, building and running the network itself (it uses NextNet equipment).

Some companies are already combining spectrum ownership, network operation and equipment manufacture in an end-to-end business model more commonly seen in public utilities or transportation than telecoms. The most famous recent example is Craig McCaw's Clearwire, which has amassed significant MMDS spectrum holdings across the US and also owns WiMAX equipment maker NextNet, which will provide Clearwire's network. The advantages are twofold. One is complete control of the future direction of the kit, with R&D able to be prioritized around Clearwire's goals, such as its chosen frequency profiles. This can be a two-edged sword as the market matures--other operators may be wary of buying technology from a rival, and so the equipment vendor could become a one-client operation, with the complacency and lack of economies of scale that brings. The pros and torts of this situation have been seen in the near-exclusive relationship between Nextel and Motorola for the iDen network.