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Backhaul

TTM Adds $55M to Backhaul War Chest

With funding nearing $120 million to date, one U.S. wireless-backhaul startup says it's ready to strike into new markets.

Telecom Transport Management Inc. , based in Seattle, announced the closing of a $55 million funding round this week from new investors Columbia Capital and Battery Ventures and prior investors Ignition Partners , Rally Capital LLC, SeaPoint Ventures , and Trilogy Equity Partners.

The fourth-round infusion gives TTM a total of $72 million collected so far. TTM got started in 2003, led by wireless industry veterans including a handful from McCaw Cellular, which had been acquired by AT&T Inc. (NYSE: T).

This latest is TTM's largest round by far; it's like eating chicken nuggets for dinner and getting a rack of lamb for dessert. The reasoning is that TTM could be ready to really take off, after starting with backhaul services in two parts of Virginia.

With the new money, TTM hopes to spread into Minneapolis and the suburbs around Philadelphia. "By this time next year, we'll probably be about three times bigger, maybe four," says Mark Hamilton, TTM's chief executive.

But wait, there's more. The investors have another $65 million set aside, a kind of mad money pool in case TTM sees the chance to expand elsewhere. TTM has likewise set aside the shares of stock it would exchange for the money.

The extra money gives TTM a way to get into a new market quickly, since wireless backhaul is an expensive proposition. TTM's preferred media are fiber-optic lines and microwave transmissions, the latter being useful in cases where fiber isn't available. TTM leases its fiber for now, but Hamilton expects a day will come when TTM might have to do a fiber buildout.

Competition in this sector is piling up. Already TTM has to contend with Fibertower, another carrier specializing in wireless backhaul. And startups, such as Exalt, are sneaking into the market as well. (See Exalt Beams Up Microwaves.)

On top of that, TTM sometimes competes with the fiber providers it leases from -- they've got varying degrees of interest in this market, Hamilton says -- and always competes with local phone companies.

T1 lines from those phone companies make up the bulk of the wireless backhaul in North America.

The craze stems from an anticipated spike in wireless bandwidth usage as data services come online. Mobile operators backhaul their networks by leasing T1 lines from local telephone companies. Firms like TTM are claiming they can provide more bandwidth at lower costs.

Moreover, Hamilton says TTM has monitoring capabilities that let customers "look into our network as if it were their own," something the company hopes helps it stand out.

The local phone companies will probably dominate the market for "the next several years," Hamilton concedes.

"We have not been going into the dense urban cores of the larger cities, because there do tend to be a number of providers available to the carriers. Our situation works best when you've got a degree of colocation of carriers at cell sites," Hamilton says. That situation tends to crop up around the periphery of a big city, where cell sites share rooftops, for example.

— Craig Matsumoto, West Coast Editor, Light Reading

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