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What Next for WLL?

By Tony Dennis

When market analysts Frost & Sullivan first looked at the global market for wireless local loop (WLL) back in 1998, the top players were Ericsson (with 23 per cent), followed by Alcatel (14); Siemens (10); Tadiran (10) and Motorola (9).

Subsequently (1999 figures) Ericsson is still top (16 per cent), followed by Alcatel (13), Siemens, Motorola, Qualcomm (before the Ericsson purchase) all with 11 per cent, followed by Lucent (10) and Nortel in seventh place (with 9 per cent). These figures also show that CDMA-based technology has carved a major share in the WLL market in just twelve months, with three of the top six suppliers offering CDMA solutions. Commenting on this shift, Brian Cotton, director of consulting with Frost & Sullivan says: "CDMA has come to the forefront. I see the primary reasons as being its capacity and scaleability. In particular it suits the smaller operators."

Superior
This view is echoed by Stephen Mallinson, senior director for marketing with Airspan Communications-a specialist supplier of CDMA-based WLL systems.

Mallinson agrees that the majority of the WLL systems with which his products compete are CDMA-based offerings, "because the industry as a whole has recognised that CDMA is the superior technology and is therefore able to overcome the limitations of rival products based on alternatives such as TDMA."

The prospects for all WLL suppliers have not met the expectations raised a few years ago. Frost & Sullivan originally predicted that revenues for WLL would reach $8.8 billion by 1999. That figure has two years later been revised downwards to $3.1 billion.

So what happened to WLL? The 1997 Frost & Sullivan report identified several major impediments to the rapid growth of WLL against traditional fixed wire alternatives. These included: delays in spectrum allocation; incumbent alternate technologies and under-educated consumers. Another theory is that the WLL industry was geared too much towards selling to developing nations and was particularly badly hit by the recent Asian crisis.

One company which made strenuous efforts to become a serious player in the wireless local loop arena is Pennsylvania-based InterDigital Communications Corporation (IDC). IDC forged alliances to promote its proprietary Broadband-CDMA (B-CDMA)-based technology with several world-leading telecommunications players including Alcatel, Samsung, and Siemens. According to Rip Tilden, executive vice president with InterDigital, the initial systems trials for B-CDMA went very well. "The technology itself performed beautifully," Tilden explains. Despite this, there have been few serious commercial implementations of WLL systems using IDC's technology.

Tilden says Alcatel and Siemens "have stepped away" from working with IDC while the company still has an agreement in place with Samsung, but says the Korean manufacturer is "reviewing its options." Tilden blames pure bad timing for this situation. He argues that IDC in conjunction with its partners had targeted developing nations-particularly in Asia-as the prime customers for their products. Hence, although the potential customers were enthusiastic about installing WLL, the necessary financial backing to do so simply wasn't forthcoming. Frost & Sullivan's Brian Cotton, however, describes these events as "a bump in the road for Asia, rather than a roadblock. There's still major interest [in selling to] the area-particularly to China which has become something of a Holy Grail to [WLL] manufacturers." Thus, despite having created an ASIC (custom chip) for its B-CDMA WLL technology in conjunction with Texas Instruments, "our prime focus is no longer on WLL although if the opportunity arose [for a large WLL project] we could do it," Tilden says. "We're aiming to migrate our core technology to 3G applications."

Cotton is not surprised by IDC's viewpoint. "WLL has fallen off the radar for some vendors," Cotton suggests. "They've decided to take a second look at how they spend their R&D dollars and 3G is looking more attractive."

Collapse
An event which adversely affected WLL's image in the UK was the collapse of Ionica which had set up operations in England and Scotland to utilise its own WLL technology to compete against BT. Cotton says that Ionica's experience caused other suppliers-like Newbridge and Siemens, for example-to concentrate on providing broadband WLL services in Europe to the business market "where the money is" rather than aiming the technology at the consumer sector.

Nonetheless, Airspan's Stephen Mallinson claims that one area his company has always been targeting in developed markets such as Europe is the PTT with a 'universal service obligation'. In this sector, a wireless solution becomes more economically attractive than maintaining an installed, copper-based fixed network. "The next phase will be to go beyond narrowband and start offering broadband services where a WLL operator could provide the complete range of services-not just voice," Mallinson argues.

Someone who also firmly believes that CDMA-based WLL solutions can, and will, continue to prove competitive is Paul Jardine, a technical architect with AMS (American Management Systems) a business and IT consulting firm specialising in telecommunications. "As the cost of mobile technology decreases, it is becoming more and more economic to install 'fixed' lines using WLL," Jardine explains. "However, one of the issues that needs to be addressed is that there is a lack of adequate support for broadband services on both CDMA and DECT." Jardine sees the key to ensuring that WLL systems can compete against fixed wire offerings is to offer equal or superior services.

In today's business environment those services generally translate into offering high-speed but low-cost Internet access. According to Mallinson this is exactly what Airspan can achieve using its proprietary CDMA technology. In September 1999, the company unveiled its PacketDrive product which integrates with its CDMA WLL offering, AS4000, to provide users with true Internet access.

Among the advantages claimed by Airspan for its PacketDrive approach is the fact that terminals can be added to the network without the need to make changes at the central base station. Perhaps equally importantly, the technology is both modem-free and 'always-on'. The latter parallels the fixed-wire ADSL style approach, where the user doesn't have to dial up in order to establish a link-the Internet connection is always there. Stephen Mallinson admits, however, that ADSL has a role to play in the broadband communications market but points out that there is a trade-off between its range and supplied bandwidth-the further away the consumer is from the hub, the lower the bandwidth. By contrast, Mallinson argues that, "There is no such range restriction with Airspan's WLL offering which is able to deliver 512 kbit/s over distances as great as 25 kilometres." He also cites UK operator BT's recent announcement that it intends to deliver ADSL at 512 kbit/s as evidence that WLL will not necessarily be at a disadvantage compared to fixed wire ADSL.

In fact, many WLL solutions can offer high speed data access as well as voice capabilities. An example is Granger Telecom, a specialist WLL supplier, whose CD2000 system employs spread spectrum, synchronous CDMA (S-CDMA) technology. Granger maintains its service can support a variety of high speed data and fax services including ISDN, Internet and leased line services.

Another major player in the WLL market is Lucent Technologies which has its own CDMA WLL solution in the shape of Airloop. Lucent claims that the Airloop system can provide cost-effective extended services including high quality voice, Internet access at Basic Rate ISDN speeds and fast data and fax services. Lucent's approach, however, is to provide potential customers with maximum flexibility. Hence Airloop can be integrated with Lucent's 5ESS-2000 switch which provides the opportunity not only to integrate WLL with fixed line solutions but also to integrate with Lucent's cdmaOne technology solutions as well.

ECI-owned company InnoWave Telecoms (formerly Tadiran), by contrast, offers the MultiGain Wireless (MGW) solution which is based upon proprietary frequency hopping CDMA technology. Innowave claims its system is capable of supplying high speed data (64 kbit/s) and Basic Rate ISDN services. The company also argues that its technology can provide services up to 30 kilometres away and over a very wide frequency band (800MHz - 3.5MHz).



Partnership
Then there is AdiCom Wireless which designs and manufactures a family of products based on proprietary A-CDMA technology. Adicom recently announced a partnership with Slovenia-based Iskratel. The new offering integrates the Aditus wireless access system with Iskratel's SI2000 switch, utilising the V5.2 digital interface developed by both companies.

The result is a wireless access network capable of interfacing with public service telephone networks utilising SS7 or R2 signalling-thereby suitable for both developing and mature telecomms markets. "By developing strategic partnerships with companies like Iskratel, Adicom can address the problem of network build-out and provisioning of affordable telecommunication services across all sectors worldwide," says Dr Adel Ghanem, president and CEO of Adicom. He claims his company takes a "revolutionary" approach to WLL. "Wireless local loop must serve as an extension to the PSTN and not as a subsystem," he argues.

Paul Jardine argues: "Head to head with traditional fixed wire, wireless local loop will have to compete aggressively on cost when quality is an issue, although the newer broadband services can be very attractive in their own right." He continues: "Alternatively, for PCS, CDMA and GSM services it [WLL] can be used in bundled packages with mobile access, offering an element of zoned billing, i.e. the customer is charged low-cost minutes for calls made from a 'fixed' location."

Despite the setbacks, WLL should have a bright future. In its favour, Frost & Sullivan cite WLL's high speed of deployment; its relatively low cost for infrastructure; few barriers to entry; relatively easy scaleability; plus the impetus from demand for Internet-based applications. The report identifies most of the initial mistakes made by suppliers, noting: "The majority of early strategies for vendors competing in the market seems to be based on obtaining a foothold in many countries rather than deeply penetrating any one country."

The report adds: "because WLL is likely to be a low-margin business, although not a money loser, financing is important to gaining a foothold in all the world regions."

Stephen Mallinson argues that one lesson that vendors have learned is that WLL can be migrated from a pure data network into a voice plus data network with no necessity for the operator to install a new system. He claims that this is one good reason why WLL has proved competitive in markets such as the Eastern European region where new operators normally start out with a restricted licence to provide data to closed user groups over private circuits and then gain a full licence to provide competitive voice services as well.

Figures put together by the ITU, Red Herring magazine and Airspan show that Asia will recover its original status as a prime user of WLL technology out of a global total of 340 million. Asia will be closely followed by Latin America, Central and Eastern Europe with Africa being the one region where growth will be small.

Another Frost & Sullivan report adds that China represented a major chunk of the Asian market with revenues of around $141 million during 1998. The ITU figures look even more impressive when the total number of WLL users (both analog and digital) in Asia-over 30 million-are compared with the latest figures from the CDG (nearly 25 million cdmaOne subscribers in the region at the end of 1999). Significantly the Frost & Sullivan report observes that "CDMA is likely to become the dominating air interface technology for digital WLL systems."

It may also be unwise to concentrate purely on developing markets. Not every observer writes off the North American and Western European markets for WLL. According to Paul Jardine: "There is a small but growing trend in the US to use the fixed line for data communications and the mobile for all voice communications. Broadband wireless is also becoming a very useful tool for new operators to bypass the incumbent PTT entirely and differentiate themselves at the same time."

Total wireless local loop market revenue forecasts (1998-2005)

Year Total ($millions) Revenue from subscriber terminals Revenue from base stations Revenue from backhaul equipment
1998 1,603.0 806.3 649.2 147.5
1999 3,107.3 1,727.7 1,131.1 248.6
2000 5,480.5 3,480.1 1,688.0 312.4
2001 8,510.0 5,863.4 2,306. 2 340.4
2002 12,375.0 9,108.0 2,871.0 396.0
2003 16,211.3 12,158.4 3,566.5 486.3
2004 19,777.7 15,624.4 3,757.8 395.6
2005 23,337.7 18,903.5 3,967.4 466.8
CAGR 39.8% 48.3% 25.4% 15.5%

Note: All figures are rounded, base year is 1999.
Source: Frost & Sullivan

Total wireless local loop equipment market revenue forecasts (world), 1996-2002

Year Revenue
($ Million)
Revenues growth rate
(%)
1996 565.0 -
1997 2,058.7 264
1998 4,580.1 122
1999 8,878.1 94
2000 12,178.1 37
2001 14,183.2 16
2002 16,500.0 16

Compound annual growth rate (1997-2004): 41%
Note: All figures are rounded, base year is 1997.
Source: Frost & Sullivan