A Primer On LMDS

While it has attracted the attention of hundreds of companies, and likely means millions of dollars for federal coffers, LMDS [short for local multipoint distribution service] is still a medium in search of a market.

Using the airwaves, LMDS can transmit large volumes of digital information, enough to support channels of video, numerous digital phone lines, as well as high speed Internet information. Resembling the offspring of a cellular phone and a satellite television service, LMDS could spell new services for consumers and businesses. But the potential for this new technology to provide such services for less than traditional telephone and cable companies can charge is what has excited companies and capitalists.

Like a cellular phone service, LMDS pumps digital signal to a user's fixed dish, much like a satellite TV receiver. But with no satellites to launch, and no far-flung network needed to accommodate a nation of roaming mobile users, LMDS networks could prove cheaper to build than cellular or satellite delivery systems. In addition, because the information can be broadcast from a fixed point, high costs of laying new cable or upgrading switches [as cable and phone companies have been doing] are avoided.

But how soon consumers and businesses could expect to receive LMDS services continues to be a subject of speculation. While industry analysts say that the first LMDS services could roll out within half a year of the auction closing, they also predict the market for LMDS services could take as long as 15 years to hit the $1 billion mark. The equipment to build LMDS networks are another matter, however. Market research firm Strategis Group estimates an $8 billion market for the nuts and bolts of what could – in time – become the U.S.' next big information network.

Written by Sean Wolfe