here's some homegrown press. not a shareholder, simply local.
fwiw, the wsj also has a piece today, albeit shorter. page B9.
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Cutting the Cord to Battle the Bells
Firm Counts on Wireless Technology to Give It the Edge
By Mike Mills
Washington Post Staff Writer
Tuesday, October 27, 1998; Page C01
Two years ago, Teligent Inc. was just another little-known Virginia technology start-up, albeit one whose chief executive was pulling down a million-dollar salary and whose freshly painted offices overlooked the Potomac in upscale Old Town Alexandria.
Today, Teligent, now based in Vienna, formally begins doing business in the Washington area and nine other U.S. markets, where the company will begin planting small antennas on customers' rooftops. At prices Teligent claims will be 30 percent lower than those offered by the regional Bells and GTE Corp., those antennas will transmit and receive high-speed Internet, data, and local and long-distance telephone service.
Teligent's going-into-business announcement is a milestone for Alex Mandl, who surprised the telecom industry in September 1996 by leaving his job as president of AT&T Corp. to run a company that nobody had heard of and whose business plan few could understand. After quietly accumulating the necessary radio frequencies, the firm's founders -- wireless veterans Rajendra Singh and Myles Berkman -- lured Mandl away with a $20 million signing bonus, a $1 million annual salary-and-bonus package, and stock options worth millions more.
Teligent now employs 1,200 people, has a stock market value of $1.57 billion and is considered among the hottest of a new breed of competitive local exchange carriers -- CLECs in industry jargon. They are picking off the Bells' most profitable urban and suburban medium-size and small business customers, a market estimated at $57 billion.
"We feel real good about being where we are," Mandl said in a recent interview. "The technology is proven, our teams are in place in all those markets, and we have the necessary capital to see us through the major part of this build-out."
Mandl's confidence in the technology aside, analysts say Teligent still needs to prove itself in the marketplace.
"There will be operational hiccups," said one Wall Street analyst who did not want to be identified. "Nobody's really seen it fully loaded in the commercial environment."
Teligent's coming-out party -- which includes an advertising push in major newspapers -- is another sign that wireless technology has arrived as a lower-cost alternative in the local phone and high-speed data market, though for now it serves only businesses. Companies including Teligent, WinStar Communications Inc. and Advanced Radio Communications are routinely rated among the most promising of the CLECs, which as a group command about 4 percent of the $110 billion local phone market.
Teligent is hoping today's announcement will help the company rebound from the hit its stock has taken over the past few months. Its shares slid to a 52-week low of $18.25 in early September, after reaching a high of $35.37 1/2 in late February. The stock closed yesterday at $29.87 1/2 on the Nasdaq Stock Market.
All competitive local exchange carrier stocks have taken a beating of late, amid investor worries that the recent market downturn has dried up the firms' ability to borrow and build their networks. Analysts say Teligent is fully funded until 2000.
While most of those companies are threading fiber-optic cables beneath city streets, and then hoping nearby buildings will tie in, wireless companies are negotiating "roof rights" and planting small antennas overhead. It's a much less expensive process, wireless advocates say, and incurs capital costs only when a customer signs up.
"When we build a local connection into the building, we amortize the cost over 100 months," said WinStar's chairman and chief executive, William J. Rouhana. "But after that, there is no out-of-pocket cost. On its own terms, it's very profitable."
WinStar will launch a new campaign today: It's offering free local phone service for a year to new customers who sign a three-year contract and work in one of 1,000 selected buildings in 13 cities, including the District.
These companies' "broadband wireless" technology has advantages over fiber: It can cover a larger geographic area, including suburban buildings that fiber may never reach; placing antennas is easier than digging up streets; and equipment can easily be upgraded, moved or altered to meet customer demand.
"The economics of density say fiber plays in the densest business districts. But there are plenty of companies outside those areas who need access," said Daniel Zito, an analyst for Legg Mason Wood Walker Inc. in Baltimore.
For all of Teligent's advantages, it hasn't been an easy two years for Mandl, who has had to draw heavily on his industry clout and persuasive powers to negotiate past the company's two biggest threats.
The first was an attack by industry rivals on Teligent's huge blocks of radio frequencies. Singh and Berkman quietly accumulated free rights to the airwaves in the late 1980s, before the Federal Communications Commission began auctioning off licenses. Competitors protested in early 1997, when the government allowed Teligent to trade those licenses for more spectrum in order to settle a radio interference squabble between Teligent and Craig McCaw's Teledesic global satellite project. In the end, Teligent prevailed.
The second challenge was overcoming skepticism about using wireless antennas for high-capacity data links to buildings. Microwave antennas have long been used for long-distance telephone trunking -- MCI originally stood for Microwave Communications Inc. But Teligent, Winstar and other players operate in the much higher "millimeter wave" frequency range of 18 to 50 gigahertz -- real estate that had never before been commercially exploited.
The advent of "point-to-multipoint" architecture for those frequencies went a long way toward allaying concerns about cost and technical feasibility. Rather than requiring separate antennas at each end of the transmission -- as in point-to-point -- the new method requires only a "hub" antenna that radiates to hundreds of surrounding customers' buildings.
"With point-to-point, you need two radios for each connection, so if you have 500 customers you need 1,000 radios," said Daniel Ernst, a telecommunications analyst for the Strategis Group, a Washington-based consulting firm. "With point-to-multipoint, if you have 500 customers you need 502 radios."
Engineering advancements also have eased concerns about signals fading during poor weather or when passing through heavy foliage.
If Teligent has the success Mandl hopes for, the company will be challenged in a new way.
"Teligent's biggest problem is that they don't have enough spectrum in all their markets to really reach the revenue targets that Wall Street analysts have given for them in the next 10 years," Ernst said. As soon as Mandl's sales teams load up Teligent's network with users, "they'll need more spectrum," he said.
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