The Risks of Converting to Two-Way ITFS Operation
and Strategies for Mitigating Them
by John B. Schwartz
At least one prominent ITFS engineer believes that ultimately there will be
only two telecommunications networks. He posits that one of these will
carry theater-quality high definition TV, and the other will deliver all else:
the internet, teleconferencing, telephone, streaming video, and a panoply of
other services. In a happy accident of history, ITFS frequencies sit astride
one of the best ways to deliver the latter network, much as a narrow strait
commands a vital shipping lane. The conversion to two-way digital ITFS
operation thus greatly increases the educational and commercial value of our
systems.
While the prospects are bright, we should not be so dazzled that we fail to
approach this important transition realistically. Just as there is a great
deal of promise, there also are very serious risks in converting to two-way.
It is no exaggeration to say that an ITFS licensee could destroy most of its
channels' worth if it fails to implement two-way in the proper fashion.
The purpose of this article is: to provide a basic grounding in two way technology
and regulation; to identify the risks involved in converting to two-way; and
to discuss means of reducing these risks to an acceptable level.
Background on Two-Way Digital Technology and Architectures
Traditionally, ITFS transmission has worked a lot like broadcast TV. A
licensee would pick the tallest tower or highest mountain for its transmitter
site. The idea was that all transmission would be "downstream"
and that the maximum number of locations could receive the signal if the transmitter
were placed at a high, central site.
In contrast, common two-way ITFS designs involve using multiple transmitter
sites to serve a metropolitan area---a technique known as cellularization---as
well as multiple receive sites to gather upstream transmissions sent by users.
The FCC calls the receivers "response hubs." Hundreds, or thousands,
of upstream transmitters on customer premises will be aimed there. Most
engineers expect that response hubs generally will be co-located with downstream
transmitters, although FCC rules do not require this.
Another technique to reuse spectrum is known as sectorization. Sectorization
involves transmitting from a given location with multiple directional antennas,
each pointed in a different direction. This increases system capacity
because separate information can be sent out (or received) by different antennas
at the same site. Sectorization is more practical in digital systems,
because transmissions to neighboring sectors can interfere with each other,
and digital signals are more resistant to interference. It is common
to design two-way systems to utilize both cellularization and sectorization.
Generally, is not ideal for cellularized transmitters and response hubs
to be located at the highest possible sites. The idea is to increase system
capacity by reusing the same frequencies; terrain isolation caused by comparatively
low sites helps reduce self-interference. Another common technique for
reducing self-interference is to alternate the frequencies used at various cells
and sectors; ITFS channel A-1, for instance, might be transmitted only to the
northwest from one cell, and only southeast from a neighboring cell.
In ITFS's original "broadcast" architecture, the idea was that every
frequency would be received at all locations in a metro area. In contrast,
many two-way system designs create a patchwork of coverage so that an individual
frequency is used sparingly; however, given that many channels are employed,
the combined system achieves near-universal coverage.
Interestingly, some two-way system designs reserve a few channels for continued
"broadcast" coverage from a single tall site, while dedicating
the remainder to cellularized/sectorized two-way usage. This allows a
continuation of one-way video for educational purposes, while devoting most
of the channels to two-way use.
Many two-way designs specify that a number of channels will be used for a "guard
band." These channels are devoted to different uses, or allowed
to remain entirely fallow. As I'll describe below, the purpose of this
guard band is to allow customer premises equipment to built inexpensively.
Customers will have comparatively simple devices on their rooftop (or even indoor
premises) which both receive downstream transmissions from cell sites and transmit
upstream to response hubs. One typical configuration has a single, small
directional rooftop antenna which is used for both transmission and reception.
Some designs look very much like a traditional wireless cable antenna.
There usually is a small equipment box attached to the antenna which contains
circuitry used for both transmission and reception. Together, these items
are referred to as a "transceiver" or "transverter."
A filter is employed in the transceiver to keep the customer's upstream transmissions
from interfering with the reception of downstream data from the cell site.
And, lest this filter cost too much, guard bands of as much as 40 MHz (almost
seven ITFS channels in width) are employed.
Given these facts, guard band channels must either be left idle or devoted to
different purposes than their peers. Although some explanations regarding
commercial operators' plans for guard band channels have been less than clear,
point-to-point links have been suggested as one feasible use for them.
The practice of dedicating some channels entirely to upstream use and others
entirely for downstream is referred to as frequency division duplex. The
acronym-prone telecommunications profession often shortens this term to FDD.
FDD is well established, and remains the predominant technology deployed in
two-way systems. It is not, however, the only way to prevent interference
between a subscriber's downstream reception and upstream transmission.
The other method is known as time division duplex, or TDD. TDD is younger and
less proven technology, but at least three manufacturers have deployed it, either
in technical tests or in operating systems. [See TDD sidebar.]
Response hubs are an important element of a two-way system, and merit an explanation.
In a typical design, a response hub will be put at each cell site.
It can employ multiple directional receiving antennas, each pointed in a different
direction, or a single omnidirectional receive antenna. Each receive antenna
will pick up transmissions sent "upstream" from subscribers in its
coverage area. Response hubs will be licensed by the FCC. Depending
upon the spectrum plan employed, it is possible that a given hub may be covered
by licenses held by different entities, if each of them contributes one or more
of the upstream frequencies. Response hubs
can be very susceptible to interference, since their receiving antennas may
be located hundreds of feet above ground and thus "see" a long
distance.
They therefore must be well protected, lest interference cripple their
ability to receive upstream transmissions reliably. The FCC rules provide
that once a response hub is licensed, it is protected against all but a slight
(1 dB) increase in interference from neighboring areas; in some cases, such
protection can preclude technical changes at transmission sites more than 50
miles away.
Because of the difficulties in coordinating response hubs with downstream transmissions,
some engineers believe that frequency use should be coordinated on a regional
basis, with certain channels dedicated solely to upstream purposes.
ITFS and MMDS frequencies are already heavily used, especially in metropolitan
areas. Each licensee is entitled to interference protection for its presently-licensed
operations. Once licensees receive authorization for two-way operation,
those facilities will be entitled to protection against all technical changes
which are proposed later.
Extensive cooperation among licensees will be needed to carry out the
conversion to two-way. Often, it will not be possible to implement two-way
operation unless licensees waive part of their interference rights. One
common example is that two licensees operating on the same frequencies in neighboring
areas may need to exchange consents in order to cellularize.
It often will be advantageous for licensees to exchange consents to accept moderate
amounts of interference, as such trade-offs often will prove necessary in order
for either one to obtain two-way authorization. Nonetheless, licensees need
to obtain expert engineering advice with respect to each request for an interference
consent, because consenting to the wrong proposal can permanently cripple their
ability to operate in the future. On at least two occasions during the
ITFS analog video days, a wireless cable operator has asked me to sign consents
that would have entailed accepting widespread and harmful interference.
When an ITFS licensee becomes part of a two-way digital system, it will share
a great deal more equipment with other licensees than it does today. For example,
there will be receive and transmit antenna arrays (typically consisting of multiple
antennas) at each cell location-and there may be dozens of cells in a large
metro area. Because the cells will be communicating with subscriber terminals
on a two-way basis, they will have to be interconnected with each other,
and with other networks, especially the internet and the phone network.
The interconnection of cell sites is generally referred to as backhaul.
The operation of individual cell sites will be of little value without backhaul,
the use of which will be shared among all ITFS/MMDS licensees providing spectrum
to a two-way system. Backhaul can be provided by wireless frequencies (which
often will not be ITFS frequencies), or by fiber.
Commonly, ITFS technical facilities have been built and maintained by our excess
capacity lessees. Such lessees also often have provided transmission sites
on a quasi-sublease basis. Most proposals for two-way systems entail having
the lessees continue to play this role, though it will grow much more complex
under a two-way regime due to the larger quantity of sites and equipment.
As you may gather from the foregoing, in many cases a redeployment of ITFS frequencies
will be essentially permanent; there rarely will be a return to our downstream-only
"status quo ante". The reason is that co-channel and adjacent
channel licensees will have obtained interference protection for the two-way
operations that preclude formerly-acceptable one-way facilities.
The transition to two-way will transform ITFS service in very positive ways.
To cite just one example, our existing instructional clients need high-speed
internet access and we'll be well positioned to provide it. But that means
that, over time, our educators will come to rely on our continued ability to
operate on a two-way digital basis. Interruptions in service will be damaging
to them, and to us.
Risks
The most important set of risks in the two-way transition accompany the expiration
or termination of the excess capacity lease. Unless adequate advance preparations
are taken, such events also will threaten the continued ability of the licensee
to operate. On a "worst-case" basis, here's what a licensee
could lose:
1. Access to cell and hub sites. This is very important, because
it will be difficult for individual licensees to change transmission sites unless
all the other ITFS/MMDS licensees do too. The reason is that current FCC
rules require that adjacent-channel transmissions be of equal received strength
at all locations. This is a standard that generally can be achieved only
if all adjacent-channel transmitters operate from the same place.
Of course, it is possible that a licensee could strike independent leases with
tower or building owners where its cell sites operate. But tower loading,
cost, and other factors are likely to preclude independent arrangements at some
or all sites---unless these arrangements are made in advance.
2. Use of both shared and licensee-specific equipment. Antenna and
combining arrays will be shared among multiple licensees. Unless continued
sharing is arranged, it will be necessary for an ITFS licensee to obtain its
own antenna systems upon lease expiration or termination. Transmitters
and some receivers may be specific to the licensee, and they too will need to
be available. Transmitters and receivers will be connected to, and probably
integrated with, data modems.
3. Backhaul and data connections. Even if a licensee has a complete
transmitting and receiving system, it will be of relatively little use unless
it is connected to the necessary data and/or phone networks at the cell sites
(or at some central connection point to which the cell sites are linked).
4. Frequencies. In an FDD two-way system, downstream frequencies
are of no use without upstream frequencies, and vice versa. If a licensee
is depending upon others for all its upstream or downstream spectrum, this is
not a viable arrangement. FDD systems also rely on the use of guard bands---which
can cause mischief in more than one way. On one hand, a licensee which
holds a license for a guard band frequency could have difficulty converting
it to other uses (and current FCC rules require the surrender of any channel
that remains unused for a year or more). On the other, the FDD requirement
for a relatively wide guard band presents an obstacle for an individual
four-channel ITFS licensee that wants to operate independently with both
upstream and downstream channels.
5. Coverage areas. Depending upon the spectrum reuse pattern used,
any four ITFS channels may cover only patches of a metropolitan area-and
additional channels generally would not be available to the licensee as they
are already occupied.
6. Incompatible arrangements with neighboring markets. If neighboring
markets use some or all of the channels licensed to the ITFS entity for upstream
purposes, they will have licensed response hubs which are entitled to extensive
interference protection. Such protection can mean that downstream facilities
on those channels are essentially frozen, so that if a licensee wants to reconfigure
its facilities following the expiration of a lease, it may be unable to do so.
7. Crippling interference consents. If the licensee has granted
unwise consents, it may be unable to operate reliably on its frequencies due
to the amount of interference it has agreed to accept.
FCC rules do not protect the ITFS licensee against most of these risks.
Some may ask why this all matters, in light of the fact that most ITFS entities
already rely heavily on excess capacity lessees. The novelty is that two-way
systems are much more complex and intertwined than one-way systems, which means
that much more advance preparation is needed if an ITFS station is to be able
to survive at the end of a lease. And here are examples of why an ITFS
station needs to be able to do so:
o The lease term may (indeed, will) expire. If there is no means
of independent operation, the ITFS licensee will not be able to negotiate a
fair renewal, or find a new lessee.
o The lessee may become insolvent and thus unable to provide shared facilities.
o The lessee may be solvent, but default in one or more of its obligations-either
because it has decided to exit the two-way wireless business or for other reasons.
Unless independent operation is possible, the licensee will
not be able to terminate the lease, or to use the prospect of termination as
a means of securing performance.
Risk Mitigation
It seems to me that there are two general approaches to mitigation. The
first attempts to ensure that licensee retains the ability operate its own two-way
facilities independent of the larger system constructed by a commercial operator.
The second conceives of the larger system as a whole that will not be disassembled;
under this premise a licensee's chief source of security is its continued ability
to operate using the combined facilities of this larger system, even if the
licensee's lease with the operator expires or is terminated.
Independent Facilities. In my view, the best approach to keeping the ability
to operate one's own two-way facility is to swap frequencies with fellow licensees
so that each licensee operates four channels that are immediately adjacent to
each other, forming a continuous 24 megahertz block of frequencies. (This
is different from the conventional pattern of ITFS frequencies, wherein each
of a licensee's channels is separated from the next by an "interleaved"
channel, which generally belongs to another entity.)
The chief shortcoming of such an approach is that a solid 24 MHz does not readily
lend itself to a guard band separating upstream from downstream transmissions,
a fact which all but rules out FDD, at least at the current state
of the art. TDD would be viable, however. Under worse case assumptions,
the upper and lower 6 MHz channels would have to be left empty as guard bands
to avoid interference to adjacent channels, but the middle channels could be
used very flexibly. (The current FCC rules in fact constitute something
approaching this worst-case scenario, although they are so protective that I
think they may be eased in the future. Currently,
the FCC requires that an applicant demonstrate that an interfering signal will
never be stronger than the "desired" signal in any part of a protected
service area. While this is easy to do if one transmits both signals
from identical sites at identical power in all directions, it is very difficult
to do otherwise.)
One significant advantage of de-interleaved spectrum used with TDD is that a
licensee could operate stand-alone two-way facilities without having to share
transmission and response hub sites with those operating on adjacent channels.
The bad news is that the licensee (or, more likely, its lessee) would have to
pay to construct the new system.
Note that a licensee can de-interleave its ITFS channels and still participate
in an FDD system-and, in fact, participate with less risk, as de-interleaved
spectrum offers a possible escape route through building a TDD system later,
should such prove necessary.
The de-interleaving of spectrum is an important element of strategy, but is
not sufficient in itself. One still needs to protect neighboring markets
against co-channel interference, and this requirement will be very stringent
if response hubs are licensed on the same channels. Also, TDD operation
could be precluded if a licensee has entered into crippling interference consents.
Survivability Within a Larger System. As ITFS licensees, we are accustomed
to thinking of our own channels and facilities as separate-or at least capable
of being separated---from those of others. Yet the very nature of a cellularized
FDD two-way system involves tightly integrating all the channels, making later
secession difficult. Although it involves a conceptual leap-and some
artful adaptations make sure that the arrangements comply with FCC rules-it
is interesting to conceive of a way one could irreversibly join an integrated
two-way system in a way that permanently benefits an individual ITFS licensee.
In this scenario, the licensee's channels would disappear irrevocably into a
Borg-like collective of transmitter sites and response hubs, which the overall
system operator would have considerable freedom to modify and expand; in exchange,
the licensee would receive a permanent proportionate share of the system's throughput.
Note that as technological advancement increases the aggregate throughput, the
licensee's share should grow as well, and it is important that lease agreements
so specify. For an initial 15 year term, the licensee would lease part
of its permanent throughput to the commercial entity that built the combined
system. However, upon
expiration or termination of the lease, an ITFS licensee's entire share of capacity
would revert, leaving the licensee free to lease excess capacity to a new commercial
operator, or to retain all the capacity for educational use.
This idea-in broad concept---entails trading a conventional ITFS system composed
of discrete licenses and equipment for a virtual ITFS system which rides on
top of permanently integrated facilities. (While such may be the practical
outcome, the legal agreements setting up a such an integrated system almost
surely will not be structured in this literal fashion, as FCC rules and policies
still call for discrete licenses, and hold the licensee legally responsible
for proper operation.)
Complex arrangements would be needed to implement this relatively simple idea,
and the challenge is to handle all the details in a way that fulfills the licensee's
regulatory obligations, as well as protects both the lessor and lessee.
Unless 100% of the specifics are satisfactory to the licensee, it would be unwise
to enter into such a bargain.
One important set of arrangements would deal with what it costs a licensee to
continue to share the integrated facilities upon lease expiration or termination.
The system operator will want to be reimbursed for a share of what it
costs to operate the overall system, including backhaul; it also may want to
recover part of its more recent capital investments, on the theory that they
were not fully amortized during the initial lease term. The licensee, in contrast,
will demand that any such shared payments be moderate, so not as to discourage
future educational use or drive away prospective new lessees. The more
complicated the formulas used to determine such charges, the greater potential
for a dispute if the lessor and lessee part company.
Even if one can provide for a possible future divorce settlement, such arrangements
will not avail if the system operator's hold over all of the system's facilities
is unsteady. If ITFS licenses are to be properly protected, that hold
must be complete and essentially perpetual.
One solution to both of the foregoing problems is for the technical facilities
not to be held by the operator at all, but rather by a cooperative formed by
ITFS and MMDS licensees. This "facilities coop" would hold the
leases to cell sites. The commercial operator----generally Sprint or
MCI/WorldCom---would loan the coop the money to finance the construction
and expansion of facilities, and it would hold a mortgage and be repaid with
interest, just as any creditor would. The coop would pay its bills out
of payments made by the ITFS and MMDS licensees, which, in turn, would receive
sufficient guaranteed lease income from Sprint, WorldCom, et al to ensure that
they could meet their obligations with money left over. I assume the licensees
also would require a performance bond to protect them against the possibility
of default. Finally, the facilities coop would contract for equipment
maintenance and other services needed to keep the system operating, and, presumably,
the contractor would be the commercial operator. Should that company become
financially unstable or desire to exit the two-way business, the contract could
be let to someone else.
Payments made by licensees to the facilities coop would be determined according
to the coop's founding agreement. They would have to be made even if a
licensee switched lessees. That would allow a licensee to drop the original
lessee, if it had an alternative income source.
I expect that Sprint, MCI/WorldCom and other prospective excess capacity lessees
may be loathe to finance extensive facilities which they do not own. On
the other hand, the arrangements I have described would be no more costly than
if they did own them, and the security of properly-drawn contracts would be
strong. The advantage to Sprint and WorldCom is that such arrangements
could persuade otherwise unwilling ITFS licensees to join into two-way systems
irrevocably, and to delegate more of the decisions about how to expand them.
"Belt and Suspenders". While the independent facilities approach
is based upon a different premise than the "virtual ITFS system" approach,
there is nothing about how these two strategies are implemented which make them
mutually exclusive; in other words, a licensee could effect frequency swaps
to de-interleave its channels, and still enter into contractual agreements intended
to ensure its ability to continue to use integrated facilities after the expiration
of an excess capacity lease.
The Need for Professional Advice
The devil clearly is in the details of how two-way conversion is implemented.
Whatever their strategies for risk mitigation, ITFS licensees need to work closely
with their counterparts in their region, as well as commercial operators.
They will need the advice of engineering experts who make two-way ITFS/MMDS
work a major part of their professional practice. In a number of cities,
ITFS licensees are considering jointly hiring consulting engineers to help them
define and reconcile their technical requirements, as well as integrate them
with those of the commercial operator at an early planning stage. I am
compiling a list of engineering firms willing to advise ITFS clients.
Lease agreements must be painstakingly drawn if they are to provide reasonable
assurance of licensee "survivability" upon expiration or termination.
I can provide contact information for a number of communications law firms representing
ITFS clients.
Finally, I am also seeking to compile a list of business experts who can provide
appraisals and similar services to assist licensees in obtaining fair compensation
when they enter into lease arrangements.
Feel free to contact me concerning these matters at:
schwartz@usa.net
telephone 303-442-2707
FAX 303-442-6472
A number of other National ITFS Association board members also have indicated
that they are willing to provide referrals to engineering, legal, and other
professionals.
Copyright 1999 John B. Schwartz
Acknowledgment
I would like to thank those in the field who took the time to comment on and
suggest revisions to this article, and, in particular, Dane E. Ericksen, P.E.,
of Hammett & Edison, Inc., Consulting Engineers, a firm located near San
Francisco, California.
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_____________________________________________________________________________
John B. Schwartz
P.O. Box 6060
Telephone 303-442-2707
Boulder, CO 80306
FAX 303-442-6472
schwartz@usa.net
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