Motorola, Cisco Buy LMDS Vendor

Motorola Inc. and Cisco Systems Inc. have expanded their
drive to put wireless communications on a firm footing in the Internet-protocol domain
with their joint acquisition of a leading supplier of LMDS gear.

Their purchase of the Bosch Telecom unit of Robert Bosch
Corp., to be called SpectraPoint Wireless LLC, marks Motorola's entry into
fixed-wireless broadband after years as a dominating force in the mobile-wireless market.

SpectraPoint will stay on course with its focus on
supplying access systems in the local-multipoint-distribution-service sector.

But Motorola, with 81 percent of SpectraPoint, is exploring
other fixed-wireless options beyond the cellular and PCS (personal-communications
services) bands, officials said.

"Motorola believes that local-exchange carriers must
begin offering timely and cost-effective alternative solutions to meet the growing demand
for broadband-communications services," said Rickie Currens, corporate vice president
and general manager at Motorola's ground-systems division.

"Through this partnership, SpectraPoint Wireless will
present one face to the customer, while delivering an array of LMDS products and
systems," Currens added.

Earlier this year, Motorola and Cisco teamed up on an
effort to define a means of integrating wireless-mobile networks into the IP domain. Their
effort includes plans to spend $1 billion on research-and-development centers for
third-party developers, as well as an attempt to create a new IP-based architecture for
the sector.

Now, the effort will be expanded to include fixed-wireless
broadband in that architectural framework, said Skip Stritter, director of market
development for broadband wireless at Cisco.

"The reason why we're moving with Motorola on
SpectraPoint is because we want to get the best-of-breed RF [radio frequency]
fixed-wireless broadband integrated into that architecture," Stritter added.

This effort in wireless is part of Cisco's larger
strategy to draw service providers to its end-to-end IP architecture, he said.

SpectraPoint has a strong head start in this direction. It
has been working with Cisco for most of the past year in a partnership devoted to tightly
integrating the router switches and other components of the IP side represented by Cisco
into the LMDS-access system, SpectraPoint vice president Tom McCabe said.

"In mid '98, we began focusing on the top 10 LMDS
companies in North America in order to make our product responsive to the primary needs of
the market," McCabe said. "A lot of thought has gone into the integration of our
system with Cisco's products."

He noted that the concept of integrating various platforms
gained strong credibility when Nextlink Communications Inc. -- the CLEC (competitive LEC)
in which cellular pioneer Craig McCaw is the major stakeholder -- added to its spectrum
holdings by arranging to purchase the LMDS licenses held by WNP Communications Inc.

WNP was the leading bidder in last year's auctions,
with 40 licenses in major markets nationwide. "That was a shot that was heard
throughout the industry," McCabe said.

Nextlink already held the 13 A-block (1.15 gigahertz of
bandwidth) and 29 B-block (150 megahertz) LMDS licenses won by NextBand Communications,
the joint venture that it shared with Nextel Communications Inc. before buying out
Nextel's stake.

As previously reported, Nextlink will use wireless
broadband in an integrated-networking scheme with its expanding fiber-based wireline
infrastructure to extend the reach of its services down into the small-business markets.

Such integration is also part of the emerging strategies of
other major telecommunications players now entering the fixed-wireless-broadband market,
including MCI WorldCom and Sprint Corp., through their purchases of various operators in
the MMDS (multichannel multipoint distribution service) spectrum at 2.5 GHz.

With products like those under development by SpectraPoint,
Motorola and Cisco, long-term wireline players will be in a position to use wireless to
quickly address the surging demand for more bandwidth without waiting to extend fiber
everywhere, noted George Harter, chief technology officer for engineering-consulting
company Hardin & Associates Inc.

"Wireless supports bandwidth on-demand and a selective
targeting of capacity into potentially lucrative markets," Harter said. "There
are differences in performance characteristics and line-of-sight issues among the various
spectrum bands, but the viability at any frequency tier is really a function of how well
you design your system."

For example, MCI, Sprint and others using the MMDS
frequencies with only 200 MHz to work with will have an approximately equal amount of
effective bandwidth to use against LMDS systems, even though the latter have more than 1
GHz of available spectrum.

This is because the lower frequencies support higher levels
of modulation systems and, therefore, higher numbers of bits per frequency cycle, or

The Federal Communications Commission has begun the process
of opening additional spectrum bands to fixed-wireless applications, including 250 MHz at
the 4.6-GHz level and a whopping 1.4 GHz at the 40-GHz tier, Harter noted. "The cost
of spectrum has turned out to be surprisingly low," he said.

The big performance gains in LMDS and other spectrum
applications of point-to-multipoint wireless broadband start with greater flexibility in
the use of bandwidth than was possible heretofore.

For example, SpectraPoint plans to begin supporting dynamic
changes in modulation schemes over any given channel as a means of responding to weather
changes that might affect performance at the more bandwidth-efficient modulation levels,
or to better serve changes in customer needs respecting the trade-offs between bandwidth
and robustness, McCabe said.