Netro to Obtain AT&T Wireless Fixed Assets
Netro Corp. on Tuesday announced that it has reached agreement to obtain the fixed wireless assets of AT&T Wireless.
The San Jose, Calif. provider of fixed wireless access networks will obtain AT&T Wirelesss fixed wireless development team, a license to intellectual property, and related equipment and software assets, in exchange for $16 million in cash and 8.2 million shares of Netro common stock. When the deal closes, AT&T Wireless will own 13.5 percent of Netro outstanding common stock.
The purchased technology was originally developed by AT&T Wireless under the name "Project Angel," said Netro. A Netro spokesman also noted that Netro is not picking up or taking responsibility for any of AT&T Wirelesss existing service contracts.
Netros fixed wireless products offer an alterative to DSL (digital subscriber line) and cable broadband in covering the "last mile" between the end-user and the high speed metropolitan backbones.
About 126 AT&T Wireless employees will now become Netro employees. Among them is AT&T Wireless fixed wireless vice president of engineering, John Saw, who will become the senior vice president of engineering at Netros Angel products division and acting general manager of Netros Redmond, Wash. facility. Lewis Chakrin, AT&T Wirelesss executive vice president of corporate strategy and planning, will join Netros board of directors.
The newly acquired Angel fixed wireless technology is based on OFDM (orthogonal frequency division multiplexing). Currently it is available to about 47,000 subscribers in ten U.S. metropolitan markets for voice and high-speed packet data services. It does not require line of sight to work.
Netro said it plans initially to take the Angel product line overseas, where there is less competition than in North America.
"Were taking technology that has been proven on the North American market, in the U.S., to the international market," Gideon Ben-Efraim, Netros Chief Executive Officer told eWeek. "We believe the wireline infrastructure is not as developed as it is in this country."
"If you go overseas, which is our target market, the municipal market for DSL is maybe 5 percent or lower," Ben-Efraim added. "So we can use this technology to provide also high-speed DSL traffic. Were talking about 700 kilobits per second for the residential user and maybe for the business user up to 2.5 to 3 megabits per second."
Netro said it is already in the process of converting the radio frequencies of the Angel wireless technology to acceptable ranges for the overseas markets, and expects to see revenue from sales in the second half of 2002. The initial prospective market will be international carriers who own spectrum in the popular 3.5 GHz frequency band, the company said.
Ben-Efraim said the Angel products will allow service providers to offer three new products: one voice line plus 256 kilobits per second data link, 2 voice lines plus 1.5 kilobits per second data link for the high-end residential user or the small enterprise, and 6 voice lines plus 2.5 megabits per second data link for somewhat larger enterprises.
Netro director of business development, Roni Floman, said the Angel products will offer service providers attractive options to expand revenue on the residential and enterprise side.
"Most of [Netros competitors] are either really strong on the voice-only side, or on the data-only side. If you think about DSL you can only sell data-to-data with very little voice, or you can just get a phone line from your telecom company," said Floman. "But there is no combination, which we think is really important for carriers to get more money out of these subscribers."
As to potential fixed wireless competition, she observed: "We see no other non-line-of sight technology that has such high data speeds, and that has been mass deployed and we think its going to give us a competitive advantage for the next couple of years."
The deal is expected to close within the next thirty days.