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Small Wireless Firms Get Set for Recovery Funds

Dan Jones
LR Mobile News Analysis
Dan Jones, Mobile Editor
7/7/2009
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Many of the larger wireless providers quizzed by Unstrung say they're "undecided" on whether to make a bid for the $7+ billion in broadband network loans and grants set aside as part of the Recovery Act. (See Buy American? Not if It's Broadband.)

Clearwire LLC (Nasdaq: CLWR), Sprint Corp. (NYSE: S), and Verizon Wireless all fall into the undecided camp. AT&T Inc. (NYSE: T) hasn't yet responded to questions about a bid. (See Defining Broadband.) Verizon went a bit further in suggesting that it -- and other larger carriers -- probably aren't the intended target for the money. "Verizon is contributing to the stimulus by its investment and innovation in broadband networks," a Verizon spokesperson tells Unstrung.

The companies that are making plans to be potential recipients of government money are smaller wireless broadband vendors like DigitalBridge Communications Corp. (DBC) and Towerstream Corp. (Nasdaq: TWER).

"We can demonstrate a proven shovel-ready business model," says Jeff Thompson, CEO of TowerStream, a WiMax service provider for small and medium-sized businesses.

Thompson plans to apply for a grant under the Broadband Technology Opportunities Plan (BTOP), rather than go for a rural-related grant. He says it will allow the operator to deploy in underserved areas in -- or adjacent to -- Towerstream's existing markets.

"We probably wouldn't go after them without the money," Thompson says, suggesting that the firm's focus on providing broadband to SMBs means that it is right in the area where the most jobs could be created.

TowerStream currently operates in New York City, Boston, Los Angeles, Chicago, the San Francisco Bay Area, Miami, Seattle, Dallas-Fort Worth, and the greater Providence, R.I., area where the company is based. Thompson estimates that the network already spans markets with around 100 million people in them.

DBC, meanwhile, is a WiMax operator that covers smaller towns and cities. A company spokeswoman confirmed to Unstrung via email that it is planning to apply for broadband money.

A company called ERF Wireless Inc. is working with Schlumberger Ltd. "to build wireless connections in rural parts of the country." It also appears to be interested in the funding. Unstrung hopes to find out more about ERF's plans later this week.

For all the potential applicants of Recovery Act grants and loans, time is of the essence. "There's not a lot of time to get a proposal together," as a Sprint spokesman noted.

The companies that want to get onboard are now waiting for application details. TowerStream's Thompson says they could be released any minute now. The application should give more guidance on how much money interested parties can apply for, though we already know that any company applying for funds must be able to match at least 20 percent of the applied-for amount itself.

Proposals for the money have to be submitted between July 14 and August 14. Thompson says TowerStream is expecting to get its proposal for the BTOP money together for an August submission.

— Dan Jones, Site Editor, Unstrung

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