Wired Buildings: Extending the Last Mile of Internet Access to Commercial Tenants By Robert D. Lane, Jr. and Ajay Raju August, 2000 ©2000 Morgan, Lewis & Bockius LLP CONTENTS: I. Demand for Digital Bandwidth 1 II. New High-Speed Internet Access Technologies 2 A. Digital Subscriber Line Technology Using Copper Wires 3 B. Optical Fiber Technology 4 C. Wireless Broadband 4 1. MMDS (Multichannel Multipoint Distribution Services) 5 2. ISM (Industrial Scientific Medical) 5 3. LMDS (Local Multipoint Distribution System) 5 4. Millimeter Wave 6 5. Satellite Technology 6 6. Laser-based Broadband Technology 6 III. Contractual Arrangements with Building Owners 7 A. Revenue-Sharing Arrangements 7 B. Exclusivity 8 1. Advantages and Disadvantages of Exclusivity 8 2. Exclusivity versus Open-Access 8 3. Clearing the Open-Access Hurdle 9 C. Legal Status of Inside Wiring 10 1. Definition of Inside Wiring 10 2. Control Over Inside Wiring 11 D. Breach of Network Security and Service Interruptions 12 E. Practice Suggestions 13 1. BLEC’s Contractual Priorities 14 2. Building Owner’s Contractual Priorities 15 IV. Future Outlook 15 Wired Buildings: Extending the Last Mile of Internet Access to Commercial Tenants By Robert D. Lane, Jr. and Ajay Raju August, 2000 I. Demand for Digital Bandwidth During the past five years, demand for high-speed Internet access and data-intensive broadband communications has grown exponentially in the business world. Prior to 1995, businesses used the Internet primarily to send e-mail and small text-based information files.1/ Since then, information sharing in the form of animated graphics, audio and low-rate video, along with text-based information and e-mail, have become an integral part of modern commerce for most large businesses in the United States.2/ For these large companies, the Internet has become an enormous marketplace where cheap and universal access to virtually every kind of information imaginable lurks just around the corner. Many small and medium-sized businesses clustered in office buildings, however, have not reaped the benefits of the recent bandwidth explosion because their buildings do not have a high-speed access network in place. Unlike large businesses, which have the resources and requirements to lease dedicated, high-speed T-1 lines3/ from the telephone company, small and medium-sized businesses cannot afford to implement their own broadband solutions. In most office buildings, small and medium-sized businesses use slow dial-up modems,4/ using existing copper wire infrastructure, to connect computers to the Information Superhighway.5/ The dial-up 1/ Kwok, Timothy, 1998. ATM: The New Paradigm for Internet, Intranet, and Residential Broadband Services and Applications. Upper Saddle River, NJ: Prentice Hall PTR. 2/ Id. 3/ A T-1 line is a high-speed, high-capacity network link used on the Internet. A T-1 line wide area network connection operates at 1.544 mega bits per second. 4/ A modem is a device that converts digital data into analog data, allowing computers to communicate over analog telephone lines. Dial-up access means connecting to another computer or network using a modem over a regular telephone line. 5/ Information Superhighway is a phrase coined by Vice President Al Gore to describe all of the new ways to communicate electronically. connections, which operate no faster than 56 kbps (kilobits per second)6/, cannot take advantage of the gigabit per second processing speeds of todays computers and multi-gigabits per second transmission rates of fiber-optic networks.7/ The gap between these office buildings and the nearest on-ramp to the high-speed networks is referred to as the last mile.8/ The difference between using a high-speed broadband network to close the last mile gap and the century-old copper infrastructure is like the difference between using a common garden hose and a high- pressure fire hose. II. New High-Speed Internet Access Technologies Capitalizing on the pent-up demand for digital bandwidth by small and medium-sized businesses, broadband access providers are racing to partner with building owners to provide customized, bandwidth-intensive last mile communications services to tenants. These companies, known in the industry as building local exchange carriers or BLECs, are fiercely competing with each other to offer innovative voice and data services through always-on connection to the Internet at speeds many times faster than the standard dial-up service. The various high-speed Internet access technologies currently offered by these BLECs fit into three broad categories: twisted-pair copper telephone wires, optical fiber, and wireless broadband. Cost and availability of each varies from market to market, and the sections below briefly describe each technology. Before beginning, however, a bit of basic background vocabulary will be useful to the average reader. For starters, bandwidth means capacity to transmit data in bits per second.9/ Traditionally, communication channels were called bands.10/ Technologists refer to the existing voice networks, which transmit information at rates below 1.5 Mbps (mega bits per second)11/, as narrowband.12/ Anything faster than 1.5 Mbps is referred to as broadband.13/ 6/ KBPS is an acronym for kilobits per second, i.e., thousands of bits per second, used to describe the speed of a network connection. Todays fastest modem operates at 56 kbps over an analog telephone line. 7/ Nettleton, Ray, May 1, 2000. Broadband Wireless Access: The First Mile, Telecommunications International. 8/ Id. 9/ A bit is the smallest unit of data retrievable through the yes/no digital signals stored in a computers memory. BPS is an acronym for bits per second. See, Newton, Harry. Newtons Telecom Dictionary, Sixteenth Edition, Expanded and Updated, February 2000. 10/ Id. 11/ MBPS is an acronym for megabits per second, i.e., millions of bits per second, used to describe the speed of a network connection. Many local area networks operate at speeds of 10 mbps or more. As mentioned earlier, a T-1 line wide area network connection operates at 1.544 mbps. 12/ Newtons Telecom Dictionary, supra at note 9. 2 A. Digital Subscriber Line Technology Using Copper Wires Digital Subscriber Line (DSL) technology deploys broadband services by increasing the availability of bandwidth on a buildings existing copper wire network.14/ DSL services use existing telephone lines to provide continuous, always-on connection to the Internet without causing busy signals if users are on the Internet.15/ This multiple use of the copper wire is made possible by taking advantage of the unused frequency bands on the copper wire.16/ While the voice traffic passes on the copper wire using audio frequencies, DSL utilizes digital signal processing technology to transfer bandwidth-intensive information on the copper wire at rates ranging from 1 to 3 Mbps.17/ Technologists predict that, in the not too distant future, certain types of DSL services will reach speeds of 5 to 15 Mbps, which are currently needed to achieve television-quality transmission.18/ Because DSL utilizes existing telephone lines, BLECs and/or the telephone companies can deploy DSL service quickly and without costly installation of higher-grade cable, although poor quality of existing building wires can impede performance. Additionally, critics have noted that DSL simply infuses a temporary breath of life to the outdated century-old copper infrastructure.19/ Further capital and technological investments in existing copper wires may be as short-sighted as temporarily patching a leaky roof and then praying for sunshine. A complete replacement of the old copper infrastructure may be the sensible, long term solution. 13/ Id. 14/ Kaplan, Mark, May 2000. Voice over SDSL: Effectively Combining Voice and Data, Telecommunications International. 15/ Goralski, Walter. 1998. ADSL and DSL Technologies. New York: McGraw-Hill. 16/ Id. 17/ Gwynne, Jeff, June, 2000. The Optical Last Mile: Market Shares Final Battleground, Telecommunications International. 18/ Behagel, Denis and Pradat, Philippe, May, 2000. Developing the Local Loop, Telecommunications International. 19/ Gwynne, Jeff, June, 2000. The Optical Last Mile: Market Shares Final Battleground, Telecommunications International. 3 B. Optical Fiber Technology Fiber-optic communications is based on the principle that light in a glass medium can carry information more quickly over longer distances, than electrical signals can carry in a copper or coaxial medium.20/ Whereas transmission over copper wires utilizes frequencies in the megahertz range, transmission over fiber utilizes frequencies a million times higher.21/ This difference permits transmission of data over fiber lines at speeds as high as 10 gbps (gigabits per second).22/ According to the International Engineering Consortium, at this speed the entire fifteen-volume set of Encyclopedia Britannica can be transmitted in well under one second. Fiber-optic broadband connections are available through a number of sources and offer virtually unlimited bandwidth to the user willing to pay for it.23/ For businesses, the cost of accessing fiber-optic connections is governed by the distance from the business to the fiber-optic network.24/ In highly urbanized areas, several companies typically maintain fiber-optic lines or networks. As a result, fiber access in urban areas is more widely available and priced competitively. In less densely populated areas, however, fiber-optic connection is generally cost- prohibitive, and perhaps unavailable. C. Wireless Broadband Wireless broadband includes a number of different technologies that range from fixed-point radio/microwave25/ to satellite26/ to laser. Currently, the business market is dominated by radio/microwave services that offer Internet connectivity at speeds greater than 1.5 Mbps.27/ Broadband providers are aggressively constructing wireless networks in different markets 20/ Newton, Harry. Newtons Telecom Dictionary, Sixteenth Edition, Expanded and Updated, February 2000. 21/ Id. 22/ Id. GBPS is an acronym for gigabits per second, i.e., billions of bits per second, used to describe the speed of a network connection.