Alvarion Lands Largest Gov't-Backed WiMax Deal
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