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4G/3G/WiFi

Alvarion Lands Largest Gov't-Backed WiMax Deal

Alvarion Technologies Ltd. (Nasdaq: ALVR) announced a $100 million contract to supply U.S. WiMax startup Open Range Communications Inc. for the largest government-funded WiMax deployment in the country.

The deal is significant not just because of its size, but also because it gives a taste of what's to come from the U.S. government's $7.2 billion broadband stimulus plan.

Open Range received a $267 million loan from the U.S. Department of Agriculture's Rural Utilities Service (RUS) in March 2008 to fund a WiMax-deployment plan to cover 6 million people in underserved regions. In January this year, the startup also received a $100 million investment from One Equity Partners , which is the private equity arm of JP.MorganChase .

Now, as part of the American Recovery and Reinvestment Act, the USDA's RUS has $2.5 billion to spend on loans and loan guarantees for rural broadband projects like the one Open Range will launch this year. In addition to that, the National Telecommunications and Information Administration (NTIA) has another $4 billion to spend on broadband projects. (See The Recovery Act and Broadband Stimulus: How Much?)

Alvarion implies that it is well placed to capture other WiMax equipment supply deals that the government funding will undoubtedly unleash. The Israeli company says that in July 2008, it received not only acceptance from the USDA but also "Buy American" status from the RUS for two of its BreezeMAX base stations. (See Zhone Says 'Buy American', AlcaLu Starts ARRA Program , and Cisco & AlcaLu vs. 'Buy American'.)

WiMax in the boondocks
Open Range's plan is to deploy mobile WiMax in 546 rural communities in 17 states, bringing service availability to 6 million people in the next five years. The operator aims to launch commercial services in the fourth quarter this year. (See Open Range Plans WiMax.)

The operator will lease ancillary terrestrial component (ATC) spectrum from Globalstar Inc. (Nasdaq: GSAT). According to an Alvarion spokesman, this spectrum is "very close" to Clearwire's 2.5-GHz spectrum, but noted that some customization would be required.

For Alvarion's five-year $100 million contract, the WiMax vendor will supply base stations as well as customer premises equipment and systems integration for the project.

While Alvarion is not part of the headline-hogging Clearwire network, it has won a fair share of U.S. WiMax deals. Its U.S. customers include DigitalBridge Communications Corp. , Towerstream Corp. (Nasdaq: TWER), AT&T Alascom, and Wisper. (See DigitalBridge Gets $16.5M, The WiMax State of Play in the USA, TowerStream: First With 802.16e in the US?, and WisperTel Buys Path.)

— Michelle Donegan, European Editor, Unstrung

joset01 12/5/2012 | 4:02:38 PM
re: Alvarion Lands Largest Gov't-Backed WiMax Deal

"The Israeli company says that in July 2008, it received not only acceptance from the USDA but also "Buy American" status from the RUS for two of its BreezeMAX base stations."


Well, that's pretty interesting, no? How does a foreign company get "Buy American" status?


DJ


 


 

Michelle Donegan 12/5/2012 | 4:02:38 PM
re: Alvarion Lands Largest Gov't-Backed WiMax Deal No kidding. It certainly sounds bizarre.
I don't have much detail on this, but I've heard that there are a lot of different hoops to jump through to get this status. You have to have other U.S. customers that will vouch for your equipment, for example, and have a certain percentage of your product's components made in the U.S.
Anyone know what the government requires to get the "buy American" status?
Michelle
NotSoSonet 12/5/2012 | 4:02:35 PM
re: Alvarion Lands Largest Gov't-Backed WiMax Deal

The amount of money, in the form of grants and/or contracts, that flows to this one country, thanks to a mighty lobby organization, is unfathomable(!!). How about Israeli arms companies being the only ones in the world to be authorized to modify US-made weaponary and reselling those weapons as makes sense to them? Soon enough, the US navy will be buying their F16/F18s from a "Buy American" Israeli manufacturer. For a country with active spies on American soil - Pollard anyone - boy do they get away with so much, all in the name of religious and ideology support, or maybe it was by intimidation. All US officials shake in their pants before their Isreali counterparts as they muster the guts to ask for cessation of illegal expanisionist settlement building. If it were me, I'd pull the plug on the money until they start acting like a viable US partner and a peace-seeking one. Only then would free commerce relations resume. No other country can dupe good natured american citizens for this long and get away with it.

realtime_guy 12/5/2012 | 4:02:35 PM
re: Alvarion Lands Largest Gov't-Backed WiMax Deal

Alvarion is a public company so all records are open. Its R&D and manufacturing is mostly in Isreal or Far East, and the components it buys can be from anywhere in the world , the criteria on components are price and performance and not US content. Its US presence is limited to sales and support operations, and that is a small operation compared to Israel. So yes, it looks like an old and powerful lobby is involved plus the use of creative accounting to justify US content requirements.


I am surprised that Moto, Cisco/Navini, Aperto, Airspan, and Harris/Telsima (all US Wimax radio suppliers) are staying quiet on a $100M contract with federal aid that favours a foreign company during these difficult times. And BTW, Alvarion is doing quite well world-wide.


 

kaps 12/5/2012 | 4:02:28 PM
re: Alvarion Lands Largest Gov't-Backed WiMax Deal

This page from the usda may help explain the status of Alvarion products: Apparently Israel, Mexico and Canada companies are part of the big umbrella.


I would also wager that once the vendor lobbyists have their say, the "buy American" rules for the stimulus funds will be loosened since even the most red, white and blue providers likely do some manufacturing offshore... it is a global economy, right?

kaps 12/5/2012 | 4:02:28 PM
re: Alvarion Lands Largest Gov't-Backed WiMax Deal

This page from the usda may help explain the status of Alvarion products: Apparently Israel, Mexico and Canada companies are part of the big umbrella.


I would also wager that once the vendor lobbyists have their say, the "buy American" rules for the stimulus funds will be loosened since even the most red, white and blue providers likely do some manufacturing offshore... it is a global economy, right?

lrmobile_PLeary 12/5/2012 | 4:02:26 PM
re: Alvarion Lands Largest Gov't-Backed WiMax Deal I am a former Alvarion mid-level exec. I did their RUS Acceptance application last year before I left the company. I can tell with 100% certainty that no powerful lobby was at play and anyone that knows Alvarion would chuckle at that thought -- Alvarion is cheap and though I tried for years, I could not get Alvarion to pay for lobbying/legal support for U.S. regulatory matters. So I did it all myself and that includes the RUS Acceptance application. At the time I was given assurances from folks in Israel that BreezeMAX (Alvarion's WiMAX product) complied with the build rules to qualify as a "Buy American" product. I currently work for the 100% U.S.-based Aperto Networks and I do now admit some frustration with the RUS acceptance standards. One can have all its R&D, ops, sales and marketing in the U.S., but if the components are sourced from around the world and assembled at some contract manufacturer outside the U.S., Canada, Mexico or Israel (such as Taiwan or the Phillipines), such a product will not qualify for Buy American. But one can have 100% of its workforce overseas and design, build and market a product that meets the "Buy American" criteria so long as overseas refers to Mexico, Canada or Israel.
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