x
Optical/IP

IoWave Begins Acquisition Spree

ATLANTA -- Supercomm -- Fixed wireless vendor ioWave Inc. has taken over MMDS provider Hybrid Networks Inc. and says this is the beginning of a buying spree that will see it add to its armory of products and services (see ioWave acquires Hybrid assets).

The bold move comes as carriers, such as Hybrid customers Sprint Corp. (NYSE: FON) and WorldCom Inc. (Nasdaq: WCOM), have reined in their MMDS (multichannel multipoint distribution service) plans as fixed wireless struggles to make major revenue-generating inroads. Hybrid itself ceased operations at the end of April this year, following a financial crisis.

IoWave, however, sees this as a golden opportunity to build an increasingly strong position in the broadband fixed wireless infrastructure and support services market.

"This is the first of many acquisitions for us," Jim Tomkins, ioWave's senior VP of business development, told Unstrung. "We are looking to provide a wholly owned, complete solution. Next we will be looking to buy an integration specialist." IoWave currently relies on partnerships for support and integration services.

Hybrid's products, which link user sites to local points of presence (POPs), dovetail with ioWave's, which link those POPs to the carrier backbone.

Hybrid's gear is based on MMDS technology and uses the 2.1GHz and 2.5-2.7GHz spectrum bands.

IoWave has wireless point-to-point and point-to-multipoint products that use unlicensed spectrum (2.4GHz and 5.3–5.7GHz) at speeds up to 45 Mbit/s and at distances up to 45 miles, according to the company.

Privately-held ioWave's expansion strategy comes at a time when the larger equipment vendors, such as Cisco Systems Inc. (Nasdaq: CSCO), Nortel Networks Corp. (NYSE/Toronto: NT), and Lucent Technologies Inc. (NYSE: LU), have largely abandoned fixed wireless development.

"It's not a big business for the large vendors," ioWave's Skip Brooks, who joined from Hybrid as part of the deal, told Unstrung. "This is more of a niche market. In the current climate they are concentrating on their core business lines, and this isn't one of them," added Brooks, now director of product marketing and sales support for ioWave's fixed wireless broadband access line of business.

In addition, the MMDS market has not taken off as expected. In the U.S., Sprint, and WorldCom had plans to roll out fixed wireless networks in tens of locations. But high costs of customer premises equipment, the limitations of line-of-sight equipment, and general economic conditions led Sprint to cease marketing MMDS services late in 2001. WorldCom, meanwhile, has been mulling the sale of its MMDS spectrum as one of the ways to ease its financial pressures.

But as costs fall and technology develops to include non line-of-site options that will improve coverage and efficiency, so MMDS is set to become a more viable broadband wireless access technology, especially in markets like Latin America where the terrain sometimes makes fixed network buildout virtually impossible.

Growth is also predicted for the U.S. market. In-Stat/MDR predicts that residential subscriptions will increase from nearly 340,000 at the end of 2001 to 3.1 million by the close of 2006.

In its press release, ioWave said it had agreed to take over the running of Hybrid's business, though terms of the agreement with the company's owners were not disclosed. Hybrid's gear currently connects more than 39,000 end users in 77 commercial operations, mostly in North America but as far afield as Nigeria and Lithuania.

Sprint has a vested interest in the deal, having invested $11 million in Hybrid in September 1999 and appointed two of the company's five directors. According to Hybrid financial statements, this gave Sprint "substantial governance rights (including veto rights over most material actions we might take…)."

Sprint declined to comment on the ioWave deal.

"We have assumed the assets, though I can't reveal any details. But it's a very good deal for us," said ioWave's Tomkins. When asked if ioWave had assumed any debt by taking on Hybrid, Tomkins said, "We wouldn't be that stupid."

The first thing for ioWave to do is integrate Hybrid's product line. "We will enhance Hybrid's products with additional select frequencies such as 3.7 GHz, add non line-of-site products to the line-of-site offering, and get costs down," he added.

While Tomkins named Proxim Corp. as a major competitor to ioWave's core business and BeamReach Networks and Navini Networks Inc. as key rivals in Hybrid's sector, he claimed that, "to the best of my knowledge," none of the other fixed wireless vendors have "the complete solution" that Arlington, Virginia-based ioWave is aiming for.

Hybrid, which was formerly listed on the Nasdaq, is based in San Jose, California.

— Ray Le Maistre, European Editor, Unstrung
http://www.unstrung.com
Be the first to post a comment regarding this story.
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE