Acquisition allows company to sidestep usual arduous negotiations, deploy services more quickly
Finding lemonade in the lemon that was BroadBand Office Inc., Yipes Communications Inc. last week bought the rights to serve more than 3,500 office buildings previously accessed by BBO.
For enterprises seeking MAN (metropolitan area network) links in the buildings covered, Yipes new contract with the real estate owners should mean faster connectivity for less money.
Building access contracts typically entail long and hard-fought negotiations between telecommunications providers and real estate owners. The access rights acquisition from bankrupt BBO will enable Yipes to deploy services faster than otherwise possible. It also will benefit its service provider customers, which will be able to connect to their customers at much lower cost, officials said.
Anobi Technology Corp., a Yipes customer and management service provider based in Chicago that caters to the financial services industry, stands to gain several dozen customers once Yipes deploys its network in the Chicago Mercantile Exchange Inc., one of the 3,500 buildings covered.
When CME is joined to the MAN, Anobi can offer high-speed connections at affordable rates to the many trading companies in the building, according to Anobi CEO Jeff Wallace.
"This is going to totally change the cost structure," Wallace said. "It is beyond belief how much money everyone can save."
During the next six months, Wallace said he expects to begin providing services to between 25 and 50 new customers in the mercantile exchange building alone.
"Before, we could only connect with them through a T-1 line, but now, all of a sudden, weve got up to 100M-bps connectivity," Wallace said. "No one was interested in doing trading applications over a T-1 line. A typical quote service can take up the entire line. The possibilities are endless now."
Yipes, based in San Francisco, gained access to approximately 150 additional buildings in Chicago, according to Yipes spokesman Jonathan Marshall.
To clinch BBOs already-negotiated deals, Yipes, which sells scalable bandwidth on demand, signed agreements with nine major real estate companies, which will ease deployment plans and ensure cooperative relationships. It continues similar negotiations with approximately 20 more real estate companies. The buildings covered include hundreds of millions of square feet of office space in 24 cities. Most of the deals encompass prime office space in downtown areas, officials said.
Yipes paid $2 million in cash and $2.5 million in equity and agreed to forgive a $900,000 debtor-in-possession loan to BBO, which filed for bankruptcy in May.
"We think weve saved many person-years of work by doing this," said Kurt Johnson, vice president of finance at Yipes. "It is not unusual for us to spend from three to six to nine months on an individual building agreement."
One month ago, Yipes signed an agreement with Rudin Management Co. in New York, gaining access to eight properties there. Eventually, the MAN service provider expects to serve all 10 million square feet of office space managed by Rudin.