quarterly-report.com Political Commentary by James R. Audet

February 4, 2000
153rd Anniversary of the first telegraph company in 1847

Pending before the Federal Communications Commission (FCC) are Internet technology and policy issues that are of critical importance to the nation.  The 20 million subscribers of America Online and the millions of other subscribers to alternative Internet Service Providers (ISPs) demonstrate convincingly that the Internet has become an essential communications medium.   Likewise, business-to-business use of the Internet (e-commerce) is exploding.

The buzzword for the new access technology is called "broadband."  The Internet is presently a narrowband medium for data and graphics, but it is destined to be a medium for video, with audio as a subset. Many content providers using technology from firms such as Microsoft, Pixelon, and Real Networks already provide streaming video and audio. Both graphics and video require bandwidth for fast transmission speed.  The public switched telephone network (PSTN), in an analog mode, is incapable of providing the necessary bandwidth.  National Television System Committee (NTSC) video requires a 4.2 MHz bandwidth. The typical home telephone line is limited to about 4 kilohertz, with an approximate throughput of 45 kb/s.  This transmission bottleneck has caused some users to refer to the Internet as the World Wide Wait.

Consumers and businesses alike are continually being exposed to a variety of Internet based applications that are requiring greater bandwidth.  The principal challenge the FCC faces in the years ahead is the growing use of the Internet protocol (IP), and soon to be deployed IP6, for the delivery of communications services that were traditionally offered by other legacy technologies, e.g., voice via plain old telephone service (POTS), video via cable television (CATV).  How the FCC will regulate, if at all, the deployment of these services and the impact regulation or lack of it may have on universal service are paramount questions for the continued growth of the medium.

The 1996 Telecommunications Act (1996 Act), Section 706, requires the FCC to encourage the deployment of advanced telecommunications capability to all Americans and to remove barriers to infrastructure investment that stand in the way of realizing that goal.

Technologically, broadband service may be offered via wire, optical fiber, mobile radio, or fixed wireless (microwave).

A suitable technology for residential broadband access to the Internet is general held to be asymmetric digital subscriber line (ADSL) -- subsets of DSL are known as "xDSL."  xDSL would be deployed on the PSTN on the "last mile" between the local exchange carrier's (LEC) central office (CO) and the home.  Payload data rates of near 6 Mb/s downstream to the home and 640 kb/s upstream may be possible.  ADSL has been rolled out in some markets, the regional Bell operating company, US West, has at least 30,000 lines in operation with equipment provided by Cisco Systems.  GTE has also deployed ADSL using equipment from Orckit/Fujitsu.  A significant limiting factor for xDSL use is the distance -- less than 3 miles -- from the home to the CO.  Consequently, xDSL is not a universally deployable technology.

Using CATV for Internet service is behind the recent merger of AT&T with cable operator, TCI, and the proposed merger of AOL with Time Warner.  These mergers create integrated communications suppliers (ICS) whose stated intent is to offer Internet access and traditional POTS-like services in addition to program content.  In addition, the companies justify these mergers by suggesting that their enhanced ability to offer broadband services using CATV plant facilitates the congressional intent of 1996 Act.  Having the capability to deliver a broadband service offering of data, voice, and video allows them to leverage -- in a financial and market context -- the content they deliver over their CATV cables, effectively subsidizing the plant upgrades necessary for two-way operation.  Cable plants are typically one-way, and only recently has the cable industry embarked on facilities reconstruction to permit upstream transmission -- an undertaking requiring significant capital.

Nevertheless, broadband deployment using cable is underway, and the number of subscribers surpasses that of xDSL deployment.  As with xDSL, a customer premise device is required, commonly called a cable modem.  Cable modems have similar payload data rates of prototype xDSL technology.  It is estimated that there are one million or more cable modem users.  Some fear that cable modems will impact negatively the deployment of xDSL and cause it to go the way of the superceded standard of integrated services digital network (ISDN).

Pursuant to a recent FCC ruling and Section 251 of the 1996 Act, the LECs are obligated to afford equal access to competing providers of enhanced services, such as xDSL and cable modem.  The ICS's are less regulated than LECs.  For LECs still amortizing the cost of their copper plant, the implications of being leapfrogged by essentially non-regulated businesses are significant.

Finally, the deployment of fiber to the home (FTTH) or fiber to the curb (FTTC) continues to be studied by the LECs.  The LECs with their ownership of rights of way have a more favorable cost model for providing these technologies.  However, because of the enormous cost of overbuilding copper plant with fiber, their universal service obligation, and the regulatory complexities associated with unbundling and equal access, FTTH/FTTC appears to have limited appeal at the present time.

In the mobile radio arena, there are two established core networks being used for second-generation mobile networks, global system for mobile communications (GSM MAP) and ANSI-41.  The ANSI-41 core network is used by the AMPS (analog), IS-136 (TDMA) and IS-95 (CDMA) air interface systems.  The air specifications for the second generation systems are inadequate for broadband applications given a current data rate of 9.6kb/s.

Third generation mobile radio, International Mobile Telecommunications in the year 2000 (IMT-2000) systems offer the greatest promise for broadband access with data rates approaching 2 Mb/s.  The Third Generation Partnership Project (3GPP) aims to develop specifications for typical transmission speeds of 144 kb/s for vehicles, 384 kb/s for outdoor to indoor and 2 Mb/s for indoor and picocell environments.  Among the technical issues confronting IMT-2000 are 2G-3G migration, backward compatibility, and sufficiency of existing allocated spectrum.

The application of radio links for fixed wireless service is a strong contender to fill the gap caused by limitations in existing wiring, either cable or twisted pair.  The FCC has made several frequency bands from 2.4 GHz to 38 GHz available.  Radio links are an attractive and less expensive means to conventional local loops, particularly in rural areas where xDSL cannot be deployed and CATV is unavailable.  In addition, fixed wireless can offer symmetrical transmission rates upstream and down, whereas present wire-based technologies (excluding fiber) do not.  Fixed wireless also permits data rates of 155 Mb/s.  This capacity far exceeds anything in the non-fiber, wired world.

As with any radio service, but particularly with microwave, the reliability of the air link is vital.  At frequencies below 7 GHz, multipath fading predominates the link budget, whereas above 10 GHz, rain attenuation is the dominant determinant of path reliability.

The FCC has made unlicensed spectrum available at 2.4 GHz, 5.8 GHz and licensed spectrum at 2.1, 2.6, 24, 28, and 38 GHz.  The 2.1 GHz, multi-point distribution service (MDS), and the 2.6 GHz, multi-channel, multi-point distribution service (MMDS) spectrum have good propagation characteristics and transmission ranges of 30 miles, but are faced with either no (MDS) or limited (MMDS) upstream data speed.  The recently concluded MMDS two-way proceeding, in conjunction with the consolidation of the industry via the purchases of existing MMDS licensees by MCI-Worldcom and Sprint has changed the regulatory and business landscape for MMDS services.  However, significant uncertainty remains as to whether the MMDS band will provide an immediate broadband alternative, in part due to the complexities of the FCC's MMDS two-way Order which will require a complete renegotiation of contracts between commercial MMDS and instructional television fixed service (ITFS) licensees.   At the present time, customer premise equipment varies between $1000 to $2000 dollars.  It is unclear how much customer enthusiasm exists for use of these bands at these price points.

28 GHz, local multi-point distribution service (LMDS) auctions were held in 1999, and significant interest was shown for this spectrum based on the success of the CellularVision LMDS trial in New York City.  Systems at these frequencies must be cellular in nature to cover a metropolitan area, with sector antennas to insure an adequate link budget.  Moreover, propagation at 28 GHz and above is almost pure line of sight. Initial engineering studies suggest that only 20 percent of the households within the footprint of a non-overlapped LMDS transmitter will receive service.   Hence, absent a massive capital equipment expenditure -- to provide duplicative, overlapping coverage -- initial indications are that LMDS and similar systems using spectrum licensed at 38 GHz will be, in the near term, predominately a business service.

In the inter-exchange carrier (IXC) arena, the use of optical fiber is by far the most widely used method for the transmission of Internet traffic.  At this time, there is no immediate capacity problem.  However, as fiber carries more and more wavelengths on the order of 10 Gb/s each, the challenge becomes the data packet switching.  Current thinking is that packet switching will become a subset of light wave switching, i.e., yellow light goes one way, green light another.  In the near term, however, the last mile path remains the bottleneck.

In conclusion, there is no clear winner among the technologies on the table for ubiquitous broadband access.  For example, MCI-Worldcom intends to make use of xDSL in addition to MMDS for their broadband deployment.  The key to the success of nationwide availability is mandate equal access or, alternatively, to insure that every locale has a multiplicity of broadband options.  In the latter case, the FCC may ultimately face a need to harmonize the service rules of the various broadband access methodologies.

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