IPWireless Fattens Its Wallet

Alternative data equipment specialist IPWireless Inc. closed two deals today. One is for funding to add to the $128 million pile it had already accumulated, while the other is with electronics manufacturer Solectron Corp. (NYSE: SLR) for the production of PCMCIA cards and modems, as IPWireless prepares to raise its profile and announce carrier contracts in Europe (see IPWireless Launches In Europe). IPWireless president and CEO Chris Gilbert revealed to Unstrung that its latest fundraising exercise had closed this morning, and that the company had raised another $25 million to $30 million, with the final amount to be announced next week. Gilbert also suggested this was about 10 times more than the cash investment made by SK Telecom (Nasdaq: SKM) in Flarion Technologies recently (see SK Flashes Cash for Flarion). Flarion is another company courting wireless carriers with a high-speed data service story. Solectron is one of the largest contract electronics manufacturers in the world, with a $16 billion turnover in 2001 and a customer list that includes LM Ericsson (Nasdaq: ERICD), Motorola Inc. (NYSE: MOT), and Nortel Networks Corp. (NYSE/Toronto: NT). What Gilbert is still not revealing are the identities of the two major telecom kit OEMs that will make its carrier equipment, as previously reported here (see IPWireless Does Mobile 3-Step). They will be announced in the first quarter of 2003, at the annual mid-February 3GSM show in Cannes. "It's two of the top five telecom equipment vendors -- you would know their names," says marketing director Mark Pittick. IPWireless is hoping to persuade Europe's 3G operators to buy its time-division duplex (TDD) networking equipment in order to offer wide area, high-speed data services (4.5 Mbit/s in Europe) across the unpaired spectrum allocated to many UMTS operators. The company claims carriers can deploy its full solution -- hardware and software -- for one-sixth of the cost of building out a full frequency-division duplex (FDD) 3G network. When pressed, though, Pittick would not disclose any prices. The IPWireless crew says contracts with at least two "Tier 1" wireless carriers in Europe will be signed by the end of 2002, though it will be up to the operators as to when they are made public. "Most likely in the middle of next year," says Pittick. The company's story is an attractive one to the carriers that have the spectrum. The networking equipment is housed at existing cell sites and has a maximum range of 29 kilometers, claims Gilbert.

In fact, one of the carriers that has been trialing the IPWireless technology with real users has noted reach of almost 30 kilometers. In early October, New Zealand data service provider Walker Wireless embarked on a trial, jointly funded by Vodafone New Zealand, with 450 users. Four IPWireless base stations were set up at high locations around Auckland, giving good coverage of the business district, some residential suburbs, and industrial areas.

"We have had residential and business users that self-registered for the service, and who have used a wide range of services and applications, from personal Internet access to VPN access to corporate data," Walker CEO Bob Smith tells Unstrung. "In a nutshell, it works." The trial users have used IPWireless modems, hooked up to a PC or laptop via an Ethernet or USB cable. Smith says data access has been achieved by people using the trial service out at sea up to 30 kilometers from a base station. He also says his company is now starting to "transition those on the test deployment to becoming paying customers. We always had a view to going commercial with this service." Walker plans to offer a flat-rate tariff for low-level residential users, as well as other pricing structures involving a flat fee plus a per-megabit charge for business customers. Smith is full of praise for the technology. "I have been in telecoms for 14 years, and this has been the best trial, the most successful project I have undertaken." Analysts at Deutsche Bank AG also praise the technology, though they "do not expect a lot of activity in this space until the overall industry improves (hopefully in our lifetime). It is encouraging to witness a demonstration of an attractive option for both UMTS and MMDS spectrum holders," they said in a research note. The latter reference is applicable for the U.S., where the IPWireless technology uses 10MHz of MMDS spectrum (2.5 GHz). Gilbert hopes to win a contract from MMDS license holder Sprint Corp. (NYSE: FON) to add to its deals with Clearwire Technologies and WorldCom Inc. (OTC: WCOEQ) (see IPWireless Flies the TDD Flag). "We are up against Navini Networks Inc. in the U.S., but we never come across Flarion," says Gilbert. "Flarion's technology is proprietary -- it's good, but proprietary. You need standards-based technology to get anywhere," he stresses. And Flarion, one of Unstrung's Top 25 Startups, just like IPWireless, is not the only target of Gilbert's dismissive tongue. He describes the homegrown 3G technology development in China, TD-SCDMA, as "a sham. There are no products and there is no reason why anyone would want them. It will never take off." There could be some wishful thinking at play here, as TD-SCDMA (time-division synchronous call-division multiple access, for those hung up on words) is also a TDD technology, and IPWireless has hopes of selling its own kit in China, as well as elsewhere in Asia. "We have engagements in China, as well as elsewhere in Asia, but we simply can't reveal any details at the moment," says Pittick. If the company is good to its word, though, it will be naming names -- carrier customers and OEM partners -- quite soon. — Ray Le Maistre, European Editor, Unstrung www.unstrung.com
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