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The Big Pipe
Good morning and welcome to "LMDS: Business Strategies and Financial
Models for Success in High-Bandwidth Wireless Communications." I am
John Prawat, president & CEO of Spectraware Corporation, and
conference chairman. And the question I pose to you this morning is
the one each of you had to answer for yourself when you made the
decision to attend this conference: Why are you here? Or, to pose the
question in the collective, WHY ARE WE HERE? Why are so many
executives in key telecommunications segments--telephony, Internet
and cable television, not to mention vendors, venture capitalists,
regulatory experts and many others--sitting in the audience right
now?
I'd like to suggest that there are three answers to this question. We are here because:
Now, when I say that "the technology is ready" I am referring to the technology trials that have taken place which you will hear about this morning. The results of these trials have been analyzed and found to be actually better than predicted in certain instances. As many of you know, LMDS relies on a cellular architecture that supports unprecedented new capabilities in fixed wireless telecommunications. LMDS has the potential to deliver an exciting array of bandwidth-on-demand services in the years ahead--voice, video and data, both broadband and narrowband. We'll be covering some of these applications, the trials and the financial implications in this conference over the next two days. And, I think it's interesting that this millimeter wave frequency, which operates way above the frequency range that your microwave oven at home operates, that is, up in the 28 to 31 gigahertz range, may well provide the communications pipe that unclogs the data log jam we're facing now . So, someday soon, we could all be nibbling on popcorn cooked at a lower frequency while we watch interactive Web TV at a higher, albeit more tasty, frequency! Remember, in the case of LMDS, it's fixed wireless we're talking about, not mobile, not portable--fixed. It's only meant to take the broadband signal over that crucial "last mile," where the capacity bottleneck is most acute, a maximum radius of one to three miles. And the point I want to emphasize is that this technology is ready to be deployed now. It could soon begin to deliver a very big bandwidth pipe to end-users in the United States and abroad.
The second thought I'd like to emphasize is: THE BOTTLENECK IS HERE. Bill Gates, in a Fortune magazine article last year, said, "Bandwidth bottleneck. No question, that's the biggest obstacle." Now, when I say "the bandwidth bottleneck is here" I am referring to the insatiable hunger for bandwidth that the developed world displays. The constantly accelerating demand for additional bandwidth seems to run parallel with, and, in fact, feeds off of our insatiable demand for faster processing speeds and more memory in the computing world. In emerging economies, this insatiable appetite is seen in waiting lists, as long as 15 to 20 years in some cases, for something we all take for granted, a simple dial tone. LMDS can help meet the very real need of those in either situation.
The world just can't get enough bandwidth. We are an information intensive society. One estimate I saw went like this: Those employed in growing, making and distributing physical goods make up about 20 percent of the U.S. workforce. In the next decade, that percentage could well shrink to less than 10 percent. Ten years from today, the percentage of us employed as knowledge workers could mushroom to well over fifty percent. So, to answer the question, WHY ARE WE HERE: In a larger context, I would say, we are here because we are all so interconnected, because we are such a knowledge-based, networked society, because we are in the midst of a digital revolution. It's been said a million times, we live in The Information Age. What nobody told us a few years ago was that the flow of this information would sometimes slow to a trickle. The World Wide Web has become known as the World Wide Wait. LMDS is simply the most promising technology I'm aware of that, for many, could alleviate the Internet log jam.
But what LMDS is all about extends far beyond the Web. It's about the convergence of voice and data, computers, cable and video. It's about Web-enhanced multi-channel video, megabit-per-second Internet access, virtual reality entertainment, telemedicine and distance learning, as well as home shopping and other transactional services. It's going to be about one giant data traffic jam, if we don't do something about it. At a deeper level, I think it's about a human longing to communicate -not just to hear a disembodied voice over a telephone line -but to really communicate, to connect, to see and be seen over vast distances. LMDS is simply a tool to bridge that distance.
By offering a BIG PIPE it will finally make possible applications that could only be dreamed of a few years ago. Like the video phone, for instance. I know. I know. You've heard it all before, going all the way back to the 1964 World's Fair. The video phone was going to revolutionize our lives, but due to the bandwidth bottleneck, what we got bore no resemblance to "life." Despite what Intel and the incumbent LECs would have us believe, herky-jerky video that nobody wants to watch will not revolutionize anything. With sufficient bandwidth, however, the full color and texture and nuance of human interaction will be displayed. With the advent of LMDS, and other broadband services, such as ADSL, cable modems, etc., I predict that video telephony will finally come into its own.
Now, you're going to hear conflicting points of view at this conference. We're not going to sing hosannas to any particular application. For example, many feel that to use this huge block of spectrum for high definition TV is a waste of bits... nothing less than a sin. My own point of view is that if it changes the nature of TV in the process, transforming it into more of an instrument for human advancement, it may not be such a sin. Moreover, I say, the future is staring us all in the face. It is an inevitability that, sooner or later, broadband services will become the norm in millions of homes across America. Now, whether those signals come into the home over the airwaves via LMDS, whether they come in over other millimeter wave frequencies, or whether the LECs and cable TV companies implement ADSL and cable modem technology on a widespread basis remains to be seen. I say, "May the best provider win!" The point is the ultimate winners in local services will be those who can provide the BIG PIPE.
Just the fact that it looks like the LMDS auctions are finally going to happen-that alone is dramatically altering the landscape for competitive local access. A major industry newsletter, referring to LMDS, said, "A sleeping giant may soon awaken." Ira Brodsky, a leading telecommunications analyst, and the moderator of our wireless local loop panel, recently said in reference to LMDS, "Local telcos and cable TV operators... this is your wake up call!" Believe me, the fact that we are meeting for this conference has been duly noted by major telecommunication players, many of whom are in attendance today.
"The time is now" is the third reason we're here. That means different things to different people. For incumbent local operators, it means that the long dreaded time of cut-throat competition is near. To those companies, I say ....
LEAD (build out your broadband
networks)
FOLLOW (partner with those entrepreneurs who have helped
to pioneer LMDS)
OR GET OUT OF THE WAY! (stop futile legal challenges).
Entrepreneurs, you know what "The time is now" really means. It's when the fun starts. And, with that, I think the time is NOW to turn this podium over to Jim Rogers, the moderator of our first panel.
(Quoted with permission from John Prawat)
John Prawat, CEO
SPECTRAWARE CORP.
2000 L Street N.W.,
Ste. 200
Washington, D.C. 20036
Tel #: (202) 293-1330
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