XO Goes (Fixed) Wireless

Amidst all the hubbub around Sprint Nextel’s wireless plans, the big AWS auction, and megafunding for Clearwire, many overlooked XO Communications as a company sitting on a lot of spectrum, some of it good enough for offering fixed wireless services. The company announced plans to offer metro services in nine markets over its LMDS spectrum. Like you, I also blanched a little when I read this news.

After all, this is the same spectrum that Nextlink, (a company that merged with Concentric to form XO) was trying to use as a last mile solution in the go-go 1990s, competing with the likes of Teligent and Winstar. While technology has improved quite a bit since the 1990s, the issues with the spectrum in the 28 GHz to 31 GHz frequencies haven’t really gone away. By focusing on the cellular backhaul and carrier-to-carrier market, XO hopes to not repeat the mistakes of the past.

The problem is that XO is not the only with that idea. First Avenue Networks (FRNS), a hodgepodge of failed fixed wireless companies and their spectrum, recently bought Fiber Tower to address the same market. First Avenue had $1.3 million in revenues and over $13 million in losses during fiscal 2005 – not exactly a sizzling business.

At the end of second quarter FRNS was still losing money, though the stock has climbed to $7.50 a share, giving the company a market capitalization of over $500 million. (Hmmmm… maybe it is the new magic mantra – wireless broadband!)

In comparison, XO which trades at around $4.50 and market capitalization of over $870 million had sales of $1.43 billion, and a loss of approximately $146 million. The profits are proving elusive for XO in 2006 as well. Hey maybe adding ‘wireless broadband’ will give a little lift to XO’s stock if not their fortunes… thoughts!

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