Editorial: Odd bedfellows: NextWave acquires IPWireless
Lynnette Luna, Editor - Fierce WiFi
April 11, 2007
fiercewifi.com
Why would a professed WiMAX company acquire a firm that builds networks based on a competing technology? NextWave Wireless, which has been pumping a lot of money into developing WiMAX and building its own chipsets, announced plans to acquire privately held IPWireless, the maker of TD-CDMA wireless broadband technology, for $100 million in cash at closing, another $25 million in cash and $75 million in NextWave stock.
NextWave has an interesting strategy, however. It's in a unique position of owning a rather substantial swathe of spectrum in the 2.3 GHz, 2.5 GHz and Advanced Wireless System bands (1710-1755 MHz and 2110-2155 MHz), while amassing pieces to make it a provider of broadband products and technology. NextWave sells WiMAX chipsets through its NextWave Broadband subsidiary, and has gotten into the deployment of WiFi networks through the $13.3 million acquisition of Go Networks. The company is also involved in mobile video to cell phones through the acquisition of PacketVideo.
With all that spectrum, does NextWave plan to become a service provider? No.
"A service provider is not something we have aspirations to be but we want to make spectrum available to those who want to enter the space and use our products and technologies," said Roy Berger, NextWave's executive vice president of marketing and communications. "The possibilities are very broad, and we're having lots of discussions with a lot of people who are interested in enhancing existing wireless capabilities or in many cases companies who are not currently viewed as service providers and want to become service providers."
TD-CDMA is a commercially proven technology that has been deployed commercially in a handful of countries, including the Czech Republic, New Zealand, Germany, South Africa, Sweden and the United Kingdom. Last October, New York City officials awarded a five-year, $500-million contract to global defense company Northrop Grumman to build a broadband wireless public-safety network based on TD-CDMA. Sprint Nextel had evaluated the technology, even investing $14 million in the company, but ultimately went with WiMAX because it struggled with the lack of an ecosystem surrounding TD-CDMA.
It could very well be the public-safety community that lifts the TD-CDMA ecosystem. The TD-CDMA system in New York is utilizing 10 megahertz of licensed spectrum in the 2.5 GHz band obtained via lease agreements with Sprint Nextel, the nation's largest holder of 2.5 GHz spectrum, and Trans Video Communications, owned by the Roman Catholic Diocese of Brooklyn. That model could be replicated in many other cities using NextWave spectrum.
Meanwhile, NextWave, which quietly went public last year and raised $355 million last month, is aiming to launch at least one market to show off its capabilities. Can the company make its strategy fly? It seems there is a significant amount of money that has to go into this business model with difficulty in scaling given the fact that WiMAX isn't commercial yet and TD-CDMA lacks an ecosystem. --Lynnette
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