The business case for 3.65GHz operators in the US

The US is becoming a sophisticated market for broadband services, where
subscribers expect a reliable and robust connection that supports voice and can
be rapidly installed. This is true not only in high-density urban areas
where subscribers have multiple broadband access choices, but also in rural or
underserved areas.

At the same time, competition is increasing for wireless operators, as their
previously underserved subscribers increasingly have access to wireline access
technologies (Digital Subscriber Line [DSL], cable, and fiber) and/or to a
competing wireless operator.

In this environment, wireless broadband operators need to have access to the
most advanced and cost-effective technologies, and to suitable spectrum
allocations. These are necessary if operators are to provide the services
subscribers have come to expect at the right price point, while still meeting
operators’ profitability targets.

The 3.65GHz band gives a unique opportunity to operators in the US to improve
the economics and performance of their networks, while giving them the
flexibility to adopt the business model best suited to their requirements.
In particular, the 3.65GHz band presents the following advantages:

More easily manageable interference. Only wireless operators have
access to the 3.65GHz band. No consumer electronic devices or WLAN
hardware is allowed in the band, significantly reducing the sources of
interference. Because they have to register the location of the base
stations, operators know in advance how competitive a new market is and can work
with each other to limit interference. It is not clear yet how effective
such coordination will be in practice, if operators are unwilling to cooperate
fully. In most markets, however, we do not anticipate a high number of
operators, as this would quickly saturate the market and make it difficult for
the operators to become profitable.

Good propagation. Many operators accustomed to the higher spectrum
frequency and lower peak power allowances of the 5.8GHz band will find the
better propagation of the 3.65GHz band a main source of cost savings (fewer base
stations are needed to cover the same area) and improved service (more reliable
connections and enhanced indoor coverage).

Well suited for data services based on Internet Protocol (IP). The FCC has
left operators much more flexibility in the use of the spectrum than in most
licensed bands. Operators are free to choose the channel bandwidth, and
the spectrum is not paired, thus allowing them to use TDD, which is better
suited to data networks, while at the same time offering full support for voice
services.

Inexpensive spectrum. Operators can obtain a 3.65GHz license very
easily for a nominal price. While this may have the effect to encourage
increased competition in the market, it also gives the opportunity to any
operator, small or large, with or without previous experience in wireless
services to enter the market.

Nationwide license, but regionally targeted service. Once an
operator obtains a license, it has the option to deploy when it chooses and
where it chooses. The FCC views the license as an opportunity, not a
commitment to roll out a service. Operators can choose to rapidly deploy
large networks to take advantage of an immediate market opportunity, or to
deploy base stations gradually in response to growth in subscriber demand.

WiMAX-based solutions for the 3.65GHz band

One of the key advantages of the 3.65GHz band is that it finally gives
independent, smaller operators the opportunity to deploy WiMAX in the US in a
licensed-exempt (or light-licensed) environment in an affordable way.

The attractiveness of WiMAX solutions is evident: as of September 2008, all the
FCC certified products in the 3.65GHz band are WiMAX-based. Redline
Communications was the first vendor to receive FCC certification in 2007.
The main advantages that WiMAX brings are the following:

Carrier-grade equipment with QoS support. WiMAX was designed to
offer carrier-grade performance in licensed bands, with full support for QoS.
It makes it possible for operators to manage traffic on a per-subscriber,
per-application, per-flow basis. In turn, this gives operators the ability
to offer SLA-based contracts to business users and to fully support voice
services.

High capacity. Each sector can support 13 Mbps with LOS and NLOS
and 18 Mbps with LOS in a 7MHz channel. This is a substantial improvement
over previous PMP proprietary technologies, which translates in the ability of
the operator to support more subscribers per sector and/or to provide higher
bandwidth per connection. Some operators may limit the number of
subscribers per sector to 5 or 10 to provide enterprise-level services.
Operators targeting the residential market may support up to 500 subscribers
within the same sector.

NLOS propagation. WiMAX allows operators to reach customers even if
they are not located along a Line-of-Sight (LOS) path from the base station.
As a result, operators can deploy fewer base stations to get the same level of
coverage-or obtain better coverage with the same number of base stations.
It also gives the operator more flexibility in positioning both base stations
and Customer Premises Equipment (CPE).

Indoor and outdoor CPE. With WiMAX, operators can choose whether to
use indoor or outdoor CPE. While many operators still prefer the higher
performance of outdoor CPE, they find the lower costs associated with a desktop
CPE, which does not require professional installation, attractive.
However, the FCC mandates a substantially lower peak power limit (1 Watt for
25MHz channel) for desktop modems than for outdoor CPE or base stations, on the
grounds that these are mobile stations, which have the potential to cause
harmful interference. This will severely limit the adoption of indoor CPE
in the 3.65GHz band.

Lower equipment costs. WiMAX supports wide-channel, multisector
base stations, which use advanced Orthogonal Frequency Division Multiplexing (OFDM)
and Orthogonal Frequency Division Multiple Access (OFDMA) modulation techniques
to reach high throughput and spectral efficiency. WiMAX effectively
delivers a lower cost per bit than other wireless technologies (and, in
particular, cellular technologies that operate in narrower channels). In
addition, operators may expect to take advantage of more competitive WiMAX
equipment prices compared to proprietary solutions, which do not enjoy the same
economies of scale.

IP-based core network. WiMAX can be more easily integrated with
other IP-based technologies than non-IP cellular technologies. It
accelerates the development of more advanced services, as well as customer
provisioning and support.

Although wireless operators in the 3.65GHz band can avail themselves of all the
capabilities supported by WiMAX technologies, they cannot use WiMAX Forum
CertifiedTM products targeted at the international market. The equipment
that can be used in the US has to meet FCC power restrictions that are tighter
than those prevalent in other countries, and vendors need to make small
adjustments to their products to receive FCC certification. While the
underlying technology, performance levels, reliability, and features are the
same as those for certified products sold by the same vendor in the
international market, operators have to be careful to choose those vendors that
have developed a specific solution to address the US market.

Similarly, the guarantee of interoperability across multiple vendors that the
WiMAX Forum certification program provides should not be assumed to necessarily
extend to 3.65GHz equipment. In many cases, vendors with interoperable
products in the 3.5GHz band will indeed have interoperable products in the
3.65GHz band but operators need to verify with the vendors that that is what
they are getting. Some vendors have invested in IOT with others within the
WiMAX ecosystem to further ensure operators can benefit from a range of
applications and devices.

Monica Paolini is the founder and president of Senza Fili Consulting and can
be contacted at monica.paolini@senzafiliconsulting.com. Senza Fili
Consulting provides expert advisory services on wireless data technologies and
services.