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Network Market Hits Cyber Space

Light Reading
LR Mobile News Analysis
Light Reading
3/25/2004

The market for second-hand network infrastructure trading has taken a new twist this week with the launch of an e-market for wireless equipment.

Cellular Asset Management follows in the footsteps of Somera Communications (Nasdaq: SMRA) in attempting to turn a profit from buying old and unused kit from carriers and selling it on to others (see Pssst! Want a Used Base Station?).

The spin here, however, is that this latest venture is based purely around online anonymity. Carriers with equipment to sell register on the site, allowing buyers to search a list of available kit.

“We have been called eBay with a focus,” quips CEO David Pearson. “There is £15 billion [US$27 billion] of unutilized asset sitting in warehouses around the world. Carriers don’t realize its worth, and nobody has been addressing the value of it.”

Pearson expects to see strong interest from “developing GSM markets in South America and Africa,” where there is “a latent demand for unused assets.”

The service is free for buyers, with sellers paying a varying percentage in commission according to the value of the sale. “It’s 10 percent for sales lower than £0.5 million [$0.9 million], 8 percent for between £0.5 and £2 million [$0.9 million - $3.6 million], and 5 percent for greater than £2 million” [$3.6 million].

Privately funded from Pearson’s own back pocket, the head man is vague on specific financial goals, stating only that the company “expects to have significant revenue within six to eight months.”

Exactly what Nokia Corp. (NYSE: NOK), LM Ericsson (Nasdaq: ERICY) and friends think of Pearson’s plans remains unclear. Both vendors have recently put specific sales focus on developing markets in an effort to ramp up revenue (see Ericsson Touts Expander and Nokia Offers Cheap GSM).

Pearson is eager to play down any potential vendor bust-up.

“I have not had any negativity from them yet, and I don’t expect to. They have to take a pragmatic view. After all, they can still make money from this by selling ongoing warranties with the kit... I don’t want to fight the vendors. I want to work with them.”

— Justin Springham, Senior Editor, Europe, Unstrung

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