Wireless Advances Push AT&T, MCI

Recent advances in wireless-broadband technology are
reshaping the lineup of players pursuing nationwide rollouts, drawing Craig McCaw's
Nextlink Communications Inc., AT&T Corp. and MCI WorldCom into the competition with
the leaders -- Teligent Inc. and Winstar Communications Inc.

"We've seen a significant improvement in the
technology since the LMDS auctions were held," said Nextlink spokesman Todd
Wolfenbarger, in reference to last year's local-multipoint-distribution-service auction.

"We may have paid a little more [for spectrum] than we
would have then, but we believe that we've attained a great deal of flexibility to reach a
larger market at very reasonable costs," Wolfenbarger added.

Nextlink is now the biggest player in LMDS, which uses the
28-gigahertz spectrum tier. AT&T and WinStar are operating at 38 GHz, Teligent at 24
GHz and MCI WorldCom at 2.5 GHz.

But all of them are tapping the same types of technical
advances that allow carriers to deliver point-to-multipoint interactive services of every
description in a highly flexible, user-friendly manner without having to connect users to
high-speed landlines.

Nextlink recently acquired the 1.15-GHz LMDS A-block
licenses to 39 markets, representing a population (POPs, or units of population) of 98
million people, from the leading LMDS-auction winner, a start-up called WNP Communications

Nextlink paid WNP $542.1 million for the licenses and
another $152.9 million in license fees to the Federal Communications Commission for the
A-block licenses and for one B-block license at 150 megahertz.

Nextlink also took full control of 13 additional A-block
and 29 B-block LMDS licenses by buying out Nextel Communications' 50 percent interest in
the two companies' joint wireless-broadband venture, NextBand.

These holdings give Nextlink 1.15 GHz of spectrum to use in
territories covering approximately 95 percent of the POPs in the top 30 markets, which is
far more spectrum per market than its rivals have in most of their markets.

At the same time, like AT&T and MCI WorldCom, Nextlink
is using fixed wireless links to extend local market coverage from a base of fiber rings
interconnected by a long-haul fiber backbone.

"The ability to combine fiber and wireless to reach
small and medium-sized businesses gives us an enormous advantage over companies that are
either all-wireline or all-wireless," Wolfenbarger said. In the wireline mode, he
noted, the company can cost-justify building fiber out to buildings only about one-quarter
of a mile from the rings, leaving it to lease T-1 facilities from telcos for deeper reach
into the market if it didn't have the wireless broadband.

"Wireless gives us buildings two-and-a-half miles away
from our rings and allows us to own the facilities," he said.

Eventually, he added, the company will be able to extend
its reach deeper, possibly moving fiber to the first points of wireless connection as the
revenue streams build and shifting the wireless transmitters further out to encompass ever
more territory.

A similar strategy appears to be taking shape at AT&T,
although officials refused to discuss details.

Sources said the carrier is making use of the advances in
wireless technology that it has achieved through its "Project Angel"
development, which has largely been focused on expanding the capacity and performance of
wireless operations at the cellular and personal-communications-services spectrum levels.

AT&T's Business Services unit has amassed licenses that
allow it to use at least 100 MHz of spectrum in 305 markets to deliver the package of
switched-voice, frame-relay, asynchronous-transfer-mode and Internet-protocol services
envisioned in its recently announced Integrated Network Connection plan.

Much of this spectrum was acquired with its purchase of
Teleport Communications Group, which earlier had acquired 38-GHz license holder
BizTel.AT&T has been using point-to-point wireless connections at 38 GHz to quickly
connect customers that aren't immediately reachable via wireline facilities, said Roger
Cawley, a spokesman for AT&T Business Services.

Now, Cawley said, AT&T is evaluating
point-to-multipoint systems for delivering fixed dedicated services from transmitters over
market areas measuring about three miles in diameter. "We're probably looking at the
machines coming out of beta-testing at Lucent [Technologies]," he added.

While AT&T has acquired more than one 100-MHz license
in some markets, including New York, it has less bandwidth to work with than Teligent and
WinStar, which have spectrum allocations averaging 400 MHz and 500 MHz, respectively, in
their major markets. AT&T also, of course, has far less to work with than Nextlink

MCI WorldCom -- which is reportedly acquiring the rights to
spectrum held by wireless cable operators for delivery of two-way telecommunications and
data services -- will have up to 180 MHz to use.

MCI WorldCom would also enjoy the advantage of being able
to reach more customers per transmitter, due to the longer reach of signals at the 2.5-GHz
MMDS (multichannel multipoint distribution service) frequency tier.

AT&T's Project Angel technology -- originally developed
for use at the PCS spectrum tier at 1.9 MHz -- can be used to accomplish much higher data
rates over a given slice of raw wireless bandwidth than is possible with the platforms
used by these other wireless carriers, said a source familiar with AT&T's thinking.

"They are just waiting for the Project Angel
development phase to be completed, and then they'll be able to move ahead with a very
robust, bandwidth-efficient platform at 38 GHz," the source said.

AT&T chairman and CEO C. Michael Armstrong said two
weeks ago that Project Angel was on track with plans for a large market test later this
year and, if all goes well, commercial rollout beyond that point.

Armstrong made no reference to frequency levels. But he was
assumed to be referring to the known plans for applications at 1.9 MHz, which can be used
to provide high-speed-data and IP-telecommunications services in competition with cable
companies that don't join the AT&T Broadband & Internet Services alliance.

A spokesman for AT&T Wireless Services, which has been
overseeing the highly secretive Project Angel effort, denied that any thought was being
given to use of the technology at the 38-GHz tier.

But former AT&T Business Services president Robert
Annunziata, who recently left AT&T to join Global Crossing Ltd., mentioned to
reporters at the ComNet conference in January that the company was weighing the use of
Project Angel technology in conjunction with the INC initiative.

Tom Holub, a senior spokesman who worked closely with
Annunziata, said AT&T is "playing all across the lot with Project Angel."

Holub said company interest in applying the technology for
a variety of applications beyond the original PCS strategy was driven by the fact that
"the cost points are dropping and, as a result, it's becoming more and more

Holub declined to go into further detail or to discuss
plans for using the 38-GHz wireless band.

As is the case with Nextlink and MCI, deploying
wireless-broadband technology in the point-to-multipoint mode would give AT&T a much
faster means of connecting customers than would be possible if it used only fiber or
copper lines.