Telecom players unite to form wireless broadband firm

A troika of telco players Wednesday announced plans to launch a wireless broadband service in 2004 for small businesses and the Canadian small office/home office market.

Allstream (formerly AT&T Canada), Microcell and NR Communications have formed a to-be-named corporate entity which will sell the service wholesale through service providers, including its member partners.

The new company will operate as an arm’s length operation “”to give the venture a level of independence from its founders and to allow for us to maximize its market potential,”” said Allstream vice-chairman and CEO John McLennan. “”The objective of this venture is to create a standalone business to successfully roll out next generation broadband wireless solutions.””

The technology is a self-installed, non line of site box which can be plugged into a PC via an Ethernet port, said NR Communications CEO Nick Hauser, who has been involved in the telecommunications business for more than 20 years. He helped get Cantel off the ground in 1985 as the company’s chief technology officer. Hauser said the technology has been sold in other parts of the world, including about 5,000 units in Mexico City.

Eventually, the member companies hope to add other services beyond broadband Internet access like voice-over IP.

Allstream, Microcell and NR Communications will take an equal third stake in the wireless venture. Allstream has pledged an initial investment of $5 million with up to $10 million to follow next year. NR Communications, a Delaware-based company that invests to telco technology and ventures, will provide $5 million in equipment. Microcell, through its subsidiary Inukshuk Internet, will contribute the use of its licensed spectrum.

Allstream’s interest in the venture is primarily to address small and medium-sized enterprises in Canada, said McLennan. “”Perhaps as we move on, depending on the success levels, the way the business models are taking shape, we may move more towards consumer and the SOHO market as well.””

Microcell president and CEO André Tremblay said he plans to roll the wireless Internet offering into the company’s cell phone business, Fido, and will look to the consumer market first.

The fact that the technology is wireless means that it could be deployed in remote areas of Canada. Lack of telco infrastructure in places like Nunavut has meant the territory has often had to rely on satellite technology to deliver Internet access. Tremblay said the partners have already spoken to public sector officials about funding wireless broadband delivery in remote regions.

A definitive rollout strategy will come next year, said McLennan. “”We could do it in selected market areas, we could blanket a small city, cover certain selective areas in larger cities — because everything is so flexible, we have a lot of different ways we can actually roll it out,”” he said.

Gartner Canada analyst Elroy Jopling had some doubts that the service would gain any momentum, given the number of broadband players already operating in Canada, particularly incumbents like Bell Canada.

The joint venture said they will offer broadband access speeds that are similar to DSL, but “”in the grand scheme of things, it’s not that much of an advantage,”” said Jopling. He cited the lack of success Look Communications had with the technology and added that there are other companies out there that offer a similar wireless service in Canada, principally TeraGo Networks.

However, Jopling said he doesn’t believe the Allstream/Microcell/NR venture will necessarily represent a great deal of risk since the initial cash investment is minimal.

TeraGo CEO Bryan Boyd said he isn’t afraid of a little competition and actually welcomes it. Wireless broadband as a technology can only benefit from the support of major carriers, he said. TeraGo’s mandate is exclusively the SME market. Boyd said he attracts a lot of business in industrial parks and currently services 13 cities in Canada.

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