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Vivint Gets Ready to Give Fixed Wireless Another Go

Mike Dano
11/18/2019

The saying "if at first you don't succeed, try, try again" certainly applies to Vivint Internet.

After a mostly failed attempt in 2015 to use fixed wireless technology to upend the nation's Internet service provider (ISP) market, the company is getting ready to give it another go, albeit this time with a new executive team, financial structure, spectrum strategy and network design.

Nonetheless, the company's basic fixed wireless approach remains largely the same: It wants to broadcast an Internet signal from a cell tower to a customer's "hub" home, and that customer would then provide a connection to their nearby neighbors via a mesh network. (It's roughly the same network design, apart from a few tweaks, that others including Common Networks and C Spire are applying in their own fixed wireless efforts.)

Vivint's ambitions are also mostly the same now as they were four years ago. In 2015, Vivint Internet said it would launch across several major markets on its way to nationwide service. And now the company is making similar promises: Vivint's current CEO Mike Hart told Light Reading that the company plans to launch service in a "number" of tier-one markets next year, covering hundreds of thousands of households. "We will announce the first of these markets early in the new year," he said.

But this time it's going to be different, Hart insists. "We know where the pitfalls exist."

According to BroadbandNow, Vivint currently covers around 700,000 people in parts of Texas and Utah with service.

5G before there was 5G
Today's Vivint Internet traces its ancestry back to security alarm installation company APX Alarm Security Solutions, founded in Provo, Utah, in 1999. After nabbing some funds from Goldman Sachs, Blackstone Group and others, the company rebranded as Vivint in 2011 and then quickly expanded into markets including smart home, solar energy and fixed wireless (partly through the acquisition of WiFi networking company Smartrove in 2013).

After testing its fixed wireless technology with roughly 15,000 customers across markets including San Antonio and El Paso, Texas, Vivint made a splash in 2015 with plans to expand to roughly a dozen major markets within a year. As noted in reports at the time, Vivint sought to blast its Internet signal from a cell tower to a nearby "hub" home using 28GHz, and then to push its services to other customers near that hub home using 5GHz. Luke Langford, Matt Eyring and Stanford professor Arogyaswami J. Paulraj (touted as the inventor of MIMO wireless communications) spearheaded the effort.

But according to financial filings from APX Group Holdings, Vivint's parent company, things appeared to quickly go south.

"During the year ended December 31, 2015 we recorded restructuring and asset impairment charges for our Wireless Internet business totaling $59.2 million, which included $53.2 million of asset impairment charges related to write downs of our network assets, subscriber acquisition costs, certain intellectual property and goodwill and $6.0 million in restructuring charges related to employee severance and termination benefits as well as write offs of certain vendor contracts," the company wrote in an SEC filing at the time.

In subsequent filings, Vivint explained that throughout 2016 it was working to shift its fixed wireless efforts from a 5GHz network to a 60GHz network. Vivint's Hart explained that the 5GHz band was simply not able to support the amount of traffic that the company's network needed to handle.

As part of its initial launch effort, Vivint leased around $31.3 million worth of 28GHz spectrum licenses from Nextlink. But Verizon purchased Nextlink in 2017 and Vivint subsequently sold the leases back to Verizon in early 2018 to the tune of $55 million. (Verizon is now using the 28GHz licenses its purchased from the likes of Nextlink, XO Communications and Straight Path as the basis for its nascent 5G network).

Second chances
By 2019, Vivint Internet's parent company, APX Group Holdings, was done with fixed wireless. "On July 31, 2019, in an effort to deliver additional cost savings and cash-flow improvements, the Company completed a spin-off of its wireless internet business," APX announced.

Vivint Internet's new management team -- CEO Hart, sales and marketing chief Paul Haynie and COO Nick Alexander -- said the company is now in the process of working with its shareholders and investors to raise the capital it will need to expand.

Vivint is planning to expand with two different services:

  • A "gigabit" offering that peaks at 930 Mbit/s and costs $80/month. Fiber-connected towers beam signals in the 70/80GHz E-Band to hub customers, which can then extend that connection to nearby customers via a 60GHz "multihop" mesh product. Vivint's CEO Hart said the technology is similar to Facebook's Terragraph project, but has been developed by Vivint and is "highly integrated, lower cost and manufactured on our mass production line in Asia." (Common Networks uses Facebook's Terragraph service, and Siklu recently announced a range of products for the technology.)
  • A 100Mbit/s offering that starts at $50/month and uses small cells to broadcast a signal via the newly freed 3.5GHz CBRS band to nearby customers. The company uses the 60GHz band to provide backhaul connections to the small cells.

The company declined to name its equipment vendors. However, Hart explained that "our network architecture it pretty radically different than before," partly due to its ability to "hop" across multiple users and partly due to its reliance on the CBRS spectrum band, which was not available during Vivint's prior efforts. "No one is building a network like we're doing," he said.

Importantly, Vivint said it plans to target urban and suburban areas with its service. That would put the company alongside Verizon's 5G Home service as well as Common Networks, Starry and Wander in using fixed wireless technology to challenge established ISPs like Comcast and AT&T in urban and suburban areas. While these kinds of wireless Internet service providers (WISPs) have boasted that their efforts provide competitive alternatives to established and staid ISPs, analysts continue to worry that the economics of fixed wireless simply can't support a broad-based challenge to the nation's incumbent wired ISPs.

But Hart said Vivint's latest spectrum strategy and network designs will make fixed wireless services in urban areas profitable. "We have crafted a business model that really does crack the economics," he said.

The fixed wireless calculation is much different in rural areas though, where customers often have even fewer Internet options -- mainly DSL or satellite. Thus, fixed wireless is increasingly being used in rural areas as a way to reach customers in places where it's not economically viable to install wired networks. Companies playing in this space range from Windstream to AT&T to Rise Broadband to Midco.

Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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