Friday September 8, 2:30 pm Eastern Time
Forbes.com
Hybrid Takes Broadband Out Of Bounds
By Kathleen Cholewka
If you want proof the wireless broadband market is cooking, ask the biggest telcos around.
One of the original reasons WorldCom (Nasdaq: WCOM - news) and Sprint (NYSE: FON - news) even began considering a merger? Broadband wireless.
Indeed, both telcos have snatched up broadband wireless Multichannel Multipoint Distribution Service (MMDS) licenses in Federal Communications Commission (FCC) auctions quickly and quietly over the last couple of years. The licenses allow service providers to sell high-speed wireless services in specific locales. Both WorldCom and Sprint are supposed to roll out fixed wireless services for residential and business users this year.
Naturally, supplying these service providers with gear is a lucrative line of business. The U.S. market for broadband wireless systems, now about $1.5 billion, is expected to grow to $7 billion in 2004, according to Michael Greenbaum, president and chief executive of wireless broadband equipment maker Hybrid Networks (Nasdaq: HYBR - news).
Formed in 1990, San Jose, Calif.-based Hybrid is 37%-owned by Sprint and reported sales of $13 million and a loss of $22 million over the last twelve months. The company supplies broadband wireless gear to customers and service providers like Sprint and WorldCom. Venture capital firm Accel Partners and chipmaker Intel (Nasdaq: INTC - news) are also part owners of the firm.
One of the places where fixed broadband wireless is in use is Phoenix's South Mountain-- a hill chock full of antennae and microwave radios that allows excellent reception of signals--where Sprint has accumulated about 4,000 fixed broadband wireless customers. Users in Phoenix are reportedly getting download rates of 1.2 megabits per second and bursts of up to 5 megabits per second for about $39.95 a month. Sprint will also roll out service in Tucson this year.
In addition to their current licenses, WorldCom and Sprint have recently petitioned the FCC to expand their offerings of two-way fixed broadband wireless Internet access. Sprint filed for a two-way MMDS license in 45 markets. If it is granted, the company would be able to sell services to 24.8 million households.
WorldCom has filed for 60 licenses and expects to launch a wireless broadband Internet access service in Memphis sometime this year.
And although the U.S. telcos are proving to be good customers, Greenbaum also plans to grow Hybrid's business by targeting international service providers. ``We're making a major shift into international markets,'' he says. Hybrid currently sells gear to Canadian companies Comlink and Bell Canada (Nasdaq: BCICF - news).
According to Greenbaum, the trend of international wireless broadband will spread to markets around the world in the next six months. He expects the worldwide broadband wireless market to be $20 billion in 2004.
Heavy competition could come from Cisco Systems (Nasdaq: CSCO - news). The networking giant made some recent moves in the market, although it has yet to deploy a commercial system with a large service provider.
Hybrid also shines in areas like security and the ability to manage wireless broadband networks. In addition to Sprint and WorldCom, the company has a healthy roster of major clients including BellSouth (NYSE: BLS - news) and Dallas, Tex.-based Nucentrix (Nasdaq: NCNX - news).
As the international market for broadband wireless system grows, suppliers like Hybrid and their investors are sure to benefit from demand for their wares all over the world. |
