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Redline Fights Back

Broadband fixed wireless vendor Redline Communications Inc. has labeled its royalty settlement with Wi-LAN Inc. (Toronto: WIN) "trivial," claiming it will have little effect on future company growth.

Last month, in an out-of-court settlement two years after Wi-LAN launched legal action, the Toronto-based company agreed to pay Wi-LAN a royalty for every OFDM wireless device “it has produced and will produce.” (See Wi-LAN Settles With Redline.)

With Redline’s marketing literature touting “over 5,000 systems deployed in more than 40 countries,” the settlement appears to be a major blow to the vendor’s revenue.

Not so, argues Keith Doucet, VP of marketing. “We looked at the prospects of fighting the case in the courts, but from a business perspective we would have been foolish not to take Wi-LAN’s royalty offer. It was such a small portion of costs compared to taking legal action that it made no sense to pursue. It would have been silly and reckless to do so. We still believe we haven’t infringed on any patents though.”

Doucet is unable to divulge specifics on the royalty sum, but declares it “rather trivial.”

Wi-LAN hadn't returned calls about this matter by press time. Redline’s marketing man is also keen to talk up the company’s plans for growth, stating that a headcount of approximately 150 will be “around 200 by the end of the year.”

This increase is expected to be fueled by a VC cash injection the vendor hopes to secure later this month. To date, Redline has raised approximately $25 million in investment funding (see Redline Scores $10M).

Redline is one of the glut of companies dominating the "pre-WiMAX" scene, competing with the likes of Alvarion Ltd. (Nasdaq: ALVR), Aperto Networks, and Wi-LAN (see Alvarion Breezes Into WiMax, Wi-LAN Extends Finnish Net, and Aperto Unveils WiMax Roadmap).

Despite their early mover advantage, these companies are unlikely to have the market to themselves in the long-term, as infrastructure incumbents Alcatel SA (NYSE: ALA; Paris: CGEP:PA) and Siemens AG (NYSE: SI; Frankfurt: SIE) are plotting moves into the market in 2005, using silicon from Intel Corp. (Nasdaq: INTC). (See WiMax Gets Serious.)

— Justin Springham, Senior Editor, Europe, Unstrung

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