Spectrum Analysis: The Critical Factor For Broadband Wireless

By Fellah, Adlane

This is shaping up to be a critical year for deploying broadband wireless in the U.S.

When it comes to WiMAX, 3G/4G and other broadband wireless services, a lot is being written about standards and capabilities, and which technologies and equipment vendors will “win.” Municipal mesh networks are also grabbing some headlines. Meanwhile, very little attention is being paid to the equally important spectrum allocation aspects of broadband wireless services.

The fact is that, unlike Wi-Fi, carrier networks need to be deployed in licensed frequency bands. Most of the world has made 3.5- GHz the primary allocated band for broadband wireless access (BWA) and/or WiMAX, but in the U.S., the FCC has determined that BWAAViMAX will use the 2.3- and 2.5-GHz frequencies.

These bands have been allocated in the U.S. for a decade-the 2.3- GHz band for Wireless Communication Services (WCS) and the 2.5-GHz band for Broadband Radio Services (BRS)-although very few networks have been deployed. Now, however, many of the WCS licenses will expire in 2006/2007. License holders will need to deploy quickly to retain their spectrum, or lease the spectrum to someone else.

This year will also see spectrum auctions and reallocations in the 1.7/2.1-GHz band, and the 2.4-2.6-GHz band, both auctions resulting from 2005 FCC rulemakings covering BRS and Advanced Wireless Services (AWS).

In short, 2006 promises to be an important year. Buildout deadlines are looming, and lower-cost, soon-to-be-certified equipment is entering the market; both these factors could constitute real drivers for broadband wireless networks in the U.S. This article reviews some of the most important rules and players in this new year.

Making Room For 3G And WiMAX

While the U.S. currently lags behind Europe in terms of 3G frequency allocation, several of the FCC’s moves are designed to improve the ability of carriers in the U.S. to offer 3G- or WiMAX- based services. Further, the FCC says it is adopting a “neutral approach” as far as which technology can be used in the new frequency bands that it is freeing up. However, we must note that the current channel specifications and the frequency division duplexing (FDD) used in the 1.7-GHz and 2.1-GHz frequency bands are more compatible with 3G radios.

One way the FCC is making room in the U.S. spectrum allocations for 3G, WiMAX and other broadband wireless services involves relocating some existing users to other frequencies. For example, 12 government agencies that use an estimated 2,240 frequency assignments will be moving from the Advanced Wireless Services (AWS) 1.71-1.755-GHz bands to other government frequency bands, at an estimated cost of more than $935 million (according to data supplied by the Department of Commerce in December 2005). With this information in hand, and in accordance with the 2004 Commercial Spectrum Enhancement Act (CSEA), the FCC can begin the auction process for 1.7/2.1-GHz spectrum to new licensees, as soon as the end of June 2006.

The FCC also plans to relocate some other AWS and BRS operations- including both commercial and government agency operations. AWS operations in the 2150-2160/62-MHz band, for example, will be moved to the newly restructured 2495-2690-MHz band, making the 2155-2160- MHz band available for fixed and mobile broadband wireless services.

At the same time that these changes were made, the FCC released a Notice of Proposed Rule Making, seeking comment on the specific relocation procedures applicable to BRS operations (more about BRS transition plans below). The FCC targets the initiation of all transitions by January 2008 or before.

The WCS Situation

Another important frequency band for the provision of broadband wireless services in the U.S. is the Wireless Communications Service frequencies. WCS is allocated in the 2.3-GHz band at 2305-2320-MHz and 2345-2360-MHz, and can be used to provide “fixed, mobile, radiolocation or satellite communication services to individuals and businesses within their assigned spectrum block and geographical area,” according to the FCC. Although the 1997 auction of WCS licenses produced more than $150 million for licenses in 128 markets, buildouts have been limited to date.

FIGURE 1 REAGs And Their Constituent Numbered MEAs

Figure 1 and Table 1 illustrate how the FCC has categorized the 128 U.S. WCS markets as Major Economic Areas (MEAs) or Regional Economic Area Groupings (REAGs). Blocks “A” and “B” of the four WCS frequency blocks consist of 52 MEAs and Blocks “C” and “D” consist of 12 REAGs.

Various factors explain the lack of success thus far in WCS network deployments. The available equipment in the late 1990s was expensive and proprietary, and few license holders had sound business plans. The telecom crash of 2000 added to the obstacles facing potential WCS operators.

Finally, many of the new license holders did not have the required knowledge and experience to build telecom networks. Some were speculating that they could resell their licenses for more money later and, indeed, many WCS licenses changed hands. For example, Nextwave acquired spectrum from BalRivGam, Telecorp, Central States and Allegheny, thus becoming a major WCS licensee and an important potential deployer of WiMAX technology in the U.S.

Another potentially important player, XM Satellite, acquired WCS licenses in the summer of 2005. XM paid WCS Wireless, an owner of WCS licenses, $196 million in XM Satellite stock, plus the assumption of an undisclosed amount of debt. The licenses that XM acquired are located in 15 of the top 20 metropolitan markets covering approximately 168 million people with an average of 9.6 MHz of spectrum per market, giving XM an opportunity to expand and offer new services, including local programming and advertising over the new spectrum. At this point, it is not clear whether XM will deploy WiMAX or 3G-based technologies.

XM and Nextwave highlight the consolidation of WCS spectrum in favor of larger organizations seeking a national footprint and having the deep pockets needed to deploy real networks.

Today, of course, many of the hurdles that faced WCS license holders in the late 1990s and at the turn of the century have been lowered. WiMAX standardization efforts are well advanced, promising low-cost certified equipment, while both license holders and regulators have a better understanding of the economics of broadband and wireless.

At the same time, WCS licensees are running up against an important FCC deadline: Most of the licenses expire in the 2006/ 2007 period, so licensees will have to start deploying quickly to maintain their licensing rights.

Although the FCC did not impose any buildout requirements on the WCS licensees at the time of auction in 1997, the Commission did mandate WCS licensees make a showing of “substantial service” in their license area within the next 10 years. “Substantial” service, as defined by the regulations, is “service which is sound, favorable, and substantially above a level of mediocre service which just might minimally warrant renewal. Failure by any licensee to meet this requirement will result in forfeiture of the license and the licensee will be ineligible to regain it.”

TABLE 1 WCS Service Areas

The BRS Situation

Compared to the WCS license holders, BRS licensees are under much less pressing buildout constraints. When the 2.5-GHz bandwidth auctions were held in 1996, the term “BRS” was unknown. Instead, these services were called the Multipoint Distribution Service (MDS)/ Multichannel Multipoint Distribution Service (MMDS), and the original licensees were mandated to build out within five years.

TABLE 2 Top BRS/WCS License Holders

Since then, however, many licenses changed hands, and in 2001, many MDS licenses were renewed until 2011. The newer BRS rules (Part 27), which were adopted in October 2004, fail to mention any mandatory buildout timeframes.

As of November 2005, there were 1,767 BRS Licenses owned by 367 companies using the BRS spectrum. Also sharing the 2.5-GHz frequencies are the Educational Broadband Service (EBS) license holders. EBS, formerly the Instructional Television Fixed Service (ITFS), has been used primarily for educational purposes by schools, hospitals and other institutions. As of November 2005, there were 1,598 EBS entities with 2,571 EBS Licenses.

Both the BRS and EBS license numbers have been very stable over the past several months, with only an occasional change in ownership in the past couple of years. There are not likely to be many ownership changes until the frequency relocation transitions (mentioned above) are complete.

Complicating these transitions in the BRS and EBS frequencies are the unresolved petitions for reconsideration filed with the FCC in the past few years. The Commission was supposed to rule on these petitions in September 2005, but this process was put on hold due to the hurricanes, etc.

Another factor delaying widespread commercial deployment is that some of the major license holders (BellSouth, Nextel, etc.) are still evaluating the role of competing broadband wireless technologies in their networks, including WiMAX, TD-CDMA and 3G. Several of these licensees have stated that they want to deploy mobile WiMAX, although the availabilit\y of certified equipment is still at least a year away.

Nextel (Sprint), for example, is developing an 802.16e based solution in partnership with Motorola. Craig McCaw’s Clearwire (dba Fixed Wireless Holdings) is proceeding with a preWiMAX solution from its manufacturing arm, NextNet Wireless, and BellSouth is proceeding with limited deployments using a pre-WiMAX product from Navini Networks. BellSouth is likely to accelerate deployments in their Florida BTAs in 2006 as these licenses were granted in 1996 and expire in March 2006. (ABTA, or Basic Trading Area is a geographic region defined by a group of counties that surround a city.)

Wireless Broadband Leaders

Today, the three top license holders of BRSAVCS spectrums in the U.S. have licenses which cover 80 percent of the population, as shown in Table 2.

Sprint and Nextel currently serve more than 35 million wireless subscribers on their networks and 5 million additional subscribers through affiliates and partners. Together with their affiliates and partners, they operate networks that directly cover nearly 262 million people, more of the U.S. population than any other carrier.

In August, 2005, the FCC not only ruled to allow the combined Sprint/Nextel company to keep its 2.5-GHz spectrum, but laid down conditions that should see broadband services based on this spectrum within reach of at least 30 million U.S. homes before the end of the decade. Specifically, the combined operator is required to offer services using this spectrum to at least 15 million Americans within four years, and an additional 15 million within six years.

This obligation does not necessarily mean that Sprint/Nextel will sign up 15 million subscribers, but it does require significant capex investments in base stations to provide the coverage, and is therefore good news for equipment vendors. We believe Sprint Nextel will deploy a combination of technologies that include WiMAX, TD- CDMA and perhaps 802.20 (depending on the local market) to deliver fixed high speed Internet as well as broadband mobile services.

Conclusions

Both WCS (2.3-GHz) and BRS (2.5-GHz) services can be used to provide fixed or mobile commercial broadband wireless services. In addition, the FCC has announced plans to open up the 3.6-GHz band under a light licensing scheme and shared use to stimulate rural broadband. The FCC may favor this spectrum falling into the hands of start-ups (rather than the RBOCs) in order to encourage new entrants in the market, but the shared aspect will make it challenging to provide carrier class services (due to a potential for signal interference).

Much is also being made of the promising 700-MHz band, which includes the spectrum currently occupied by UHF TV channels 52 through 69 (698-MHz-806-MHz) (see “High Hopes For Low Frequencies,” and BCR, January 2006, pp. 57-60). But the currently licensed 2.5- GHz and 2.3-GHz bands and upcoming AWS bands probably are the most likely candidates for a nationwide broadband wireless service.

Most BRSAVCS license holders hope that using WiMAX instead of 3G technologies will cost less. Meanwhile, U.S. cellular carriers, whose licensed spectrum is in the traditional cellular (850-MHz) and PCS (1850-1990-MHz) frequency bands are upgrading their 2G voice networks with data-only overlays, such as Evolution Data Only (EV- DO) and high-speed downlink packet access (HSDPA). It also should be noted that even the latest 3G standards (such as 3GPP current Revision A) are incomplete and optimized for voice, not data.

The broadband wireless field has been dominated by small players experimenting with WCS (2.3 GHz), using the pre-BRS 2.5-GHz (MDS) for a few wireless cable deployments, and using unlicensed bands at 5.8 GHz mainly in rural areas where no other broadband service is available. Now, thanks to lower-cost equipment, better-prepared business plans and the clear product roadmap provided by WiMAX standardization, some major players, such as BellSouth, Sprint, Clearwire and other important license holders, are moving on with real networks to start selling broadband services in underserved areas.

Overall, we believe that 2006 will be the year of decision for both WCS and the newly-transitioned BRS broadband wireless offerings. The challenge for all operators is that WiMAX radios in the 2.3/2.5-GHz bands will not be commercially available until at least the end of 2006. Therefore license holders who want to proceed will have to accept the risks that accompany deploying proprietary or pre-WiMAX equipment for at least another 12 to 15 months. These risks include the possibilities that their suppliers may decide not to upgrade to standardized versions, or might even go out of business.

Finally, given the upcoming auction for AWS spectrum, which is more proper for 3G technology, it is essential for the pre-WiMAX vendors to deliver certified equipment in the 2-2.5-GHz bands very soon if WiMAX is to be successful in the burgeoning U.S. marketn

Companies Mentioned In This Article

Airspan (www.airspan.com)

BalRivGam (www.balrivgam.com/)

BellSouth (www.bellsouth.com)

Clearwire (www.clearwire.com)

Intel (www.intel.com)

Navini Networks (www.navini.com)

NextNet Wireless (www.nextnetwireless.com)

Nextwave Wireless (www.nextwavetel.com)

Qualcomm (www.qualcomm.com)

Sprint(Nextel) (www.sprint.com)

WCS Wireless LLC (no website, see http://www.colcap.com/ portfolio/communications_service.html)

XM Satellite Radio (www.xmradio.com)

WCS licensees must offer “substantial” services by 2007

…while BRS licenses are not being held to a buildout timeframe

High Hopes For Low Frequencies

The 700-MHz band, including the spectrum occupied by UHF TV channels 52 through 69 (698 MHz-806 MHz) is exceptionally attractive to wireless broadband operators because low frequencies propagate farther than higher frequencies, penetrate through trees and buildings and bend around obstacles. This reduces the cost of deployments compared to systems operating at higher frequencies.

Generally speaking, a doubling of the frequency at which a wireless system operates, equates to a doubling of deployment costs and at least a doubling of cell sites (or the halving of each cell’s coverage area). Of course there are other factors to consider, such as available spectrum bandwidth and subscriber density, but all else being equal, bandwidth in the lower frequencies provides competitive advantage compared to similar bandwidth at higher frequencies. At low frequencies, digital video broadcast and mobile broadband services can be made very cost effective, despite relatively narrow spectrum bands.

The 700-MHz spectrum is increasingly being developed for use of orthogonal frequency division multiplexing (OFDM) technologies. For example, Qualcomm has shifted from use of code division multiple access (CDMA) to OFDM as the core technology in MediaFlo. Qualcomm purchased Flarion (including its roughly 100 patents) in order to strengthen its OFDM patent position. OFDM will be the PHY layer of both WiMAX and 4G.

Similarly, Airspan, Intel and other companies are pursuing development of systems based on OFDM/WIMAX. As TV broadcasters migrate away from the 700-MHz frequencies (around 2009), the vacated and relicensed spectrum could become the decisive factor in how quickly and extensively broadband wireless development unfolds

Sprint/Nextel must offer services that reach 30 million people within the next six years

Adlane Fellah is senior analyst with Maravedis (www.maravedis- bwa.com), specializing in research and analysis of WiMAX and broadband wireless markets. He can be reached at afellah@maravedis- bwa.com. This article is partially excerpted from the author’s December 2005 report, “BRS, EBS and WCS Regulatory and Licensing Analysis” and uses data from the author’s ClearSpectrum database.

Copyright Business Communications Review Mar 2006