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Summary:

The buzz around Craig McCaw’s Clearwire and WiMAX has been the kind of boost tiny Towerstream has been looking for. It had been selling fixed wireless services to businesses for a while and had made a nice living following the time tested business philosophy of organic […]

The buzz around Craig McCaw’s Clearwire and WiMAX has been the kind of boost tiny Towerstream has been looking for. It had been selling fixed wireless services to businesses for a while and had made a nice living following the time tested business philosophy of organic growth. (Read: Last Mover Advantage) Of course, that meant not many paid much attention to them, and turning a profit was hard.

With Clearwire IPO, atleast one part of the equation changed. The company which listed itself on the OTC (over-the-counter) stock markets by doing a reverse merger with University Girls Calendar Ltd, has benefitted from the WiMAX hype.

It quickly graduated to the NASDAQ stock exchange and their stock climbed to about $5.5 a share. The company is now planning to sell ten million shares at $4 a pop. The plan is to use the money to grow in target markets, though unlike Clearwire, Towerstream is firmly focused on business customers.

The expansion into new markets is coming at a price. The company took on $3.5 million in debt, and spent heavily to buyout Speakeasy’s WiMAX business in Seattle. Towerstream lost $1.64 million in the first quarter of 2007, which is close to the total losses for 2005 and 2006 put together. The revenues were $1.5 million in the quarter, essentially flat with the same quarter in 2006. And that is with expansion into new markets. “We cannot anticipate when, if ever, our operations will become profitable,” they say. Okay, we appreciate the honesty.

Of course, that money losing trait is something Towerstream shares with Clearwire, which this morning announced that it is launching its service in Richmond, Virginia.

  1. Towerstream is doing it right, and if they continue using WiMAX based features on their Unlicensed spectrum radios they will eventually dominate the commercial PTP and PTMP Wireless Market. It will be difficult for Clearwire and or SPrint to compete for these commercial customers with their Licensed Mobile 2.5Ghz WiMAX systems that are burdened by the price of the spectrum, the high price of their proprietary network (Base Station and CPE) and the low bandwidth levels they can deliver/customer.
    SOme prominant WIMAX system providers are bypassing the Fixed side of WiMAX and focusing totally on Mobile, which may prove a big mistake in both Towerstreams commercial markets and the Cell carriers Back haul market space
    Towerstream can easily deliver a 10-40Mbps pipe to a commercial customer cost effectively within an Urban environment by using a variety of low cost off the shelf PTP or PTMP radio’s($3500 for radios & antennas both ends) using the 5.3,5.4 & 5.8 Ghz radios. New WiMAX features on PTMP radios will also work nicely with these new 5Ghz radios deploying WiMAX OFDM (multipath resolved) based systems.

    Jacomo

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