Maxlink’s licences revoked; department considers realignment of LMCS allocation

Industry Canada has revoked the spectrum licences of Maxlink Communications Inc., closing the books on a tempestuous 13-month business saga and on this country’s first foray into high-frequency wireless services. The Toronto-based company, and major spectrum-holder, sank into receivership in November 2000 (RoW, Dec. 11/00), sparking a combined effort by the receiver and Industry Canada to transfer the assets to an unnamed suitor. Last week, the department acknowledged the failure of those efforts and regained control of the spectrum. Several parties had shown some interest in acquiring Maxlink’s assets, which included a massive amount of 28 GHz holdings. Despite the emergence of one serious contender last spring and the efforts of receiver Ernst & Young to find a buyer, a deal couldn’t be closed. At press time, Ernst & Young officials were unavailable for comment on the revocation of the licences or the sale of other Maxlink assets. Mike Connolly, senior director of spectrum management operations at Industry Canada, tells Report on Wireless that after 13 months of wrangling, a decision had to be made. The company was living on borrowed time, he says, and "that borrowed time has run out. So we felt someone had to act to regularize the situation." According to department documents, the unnamed suitor made several attempts to secure Maxlink’s spectrum licences, but was unable to satisfy undisclosed department requirements in an initial application. It was given an extension last July to meet those requirements. With the deadline of Aug. 15, 2001 having long passed, the department had no choice but to pull the plug last month. "As you are aware, the extension of the interim operating authority was to provide an opportunity for the applicant requesting the transfer of the Maxlink LMCS licences and authorizations to submit a revised application and to submit the outstanding licence fees for those licences by August 15, 2001," Industry Canada writes. "The department noted in its letter that failure to provide both of the requested items would result in the revocation of the Maxlink authorizations." Industry Canada worked closely with Ernst & Young to make sure that all interested parties understood the implications of purchasing Maxlink. "We talked to various potential purchasers to make sure they understood what the licences represented, what the obligations were (and) what the flexibilities were," Connolly explains. In the end, these conditions may have been the final nail in the coffin for the bankrupt company. While several companies expressed an initial interest in Maxlink, they all disappeared over the course of the prolonged process. Promising technology couldn’t find market The company won the right to a portion of the 28 GHz range following a competitive review process – essentially a beauty contest – in 1996 (for more information, see the Nov. 13/96 edition of RoW affiliate publication, Canadian Communications Reports). WIC Connexus and Regional Vision were the other two original licensees. In 1999, Maxlink acquired a controlling interest in WIC, which had previously taken over Regional Vision, to solidify a national footprint and 1,000 MHz of spectrum (RoW, June 21/99). Despite being plagued by technology and equipment problems, which delayed the introduction of services (RoW, Feb. 24/99), the Toronto-based company launched in several large Canadian cities four years after first receiving the rights to the 28 GHz band (RoW, July 10/00). When the company officially rolled out, it had secured access to about 70 office towers in five Canadian cities. Less than six months later, the company was still unable to garner enough interest in its services to meet its financial commitments. For more than a year, court-appointed receiver Ernst & Young tried to find a buyer for the assets. There was considerable hope for a happy ending last spring when WDSL Inc., a Burlington ON wireless Internet service provider, tabled a bid for Maxlink’s assets (RoW, April 30/01). Several original Maxlink shareholders, including chair Joel Bell, were also apparently involved with that bid, according to sources. At the time, insiders told Report on Wireless that WDSL was only interested in the licences covering southern Ontario and if a deal were reached with the department, the company would then try to sell the rest of the licences. Department reviewing possible LMCS realignment The whole future of LMCS-type services is now in doubt with the fate of Norigen Communications still up in the air. Last fall, the company was forced into receivership by its primary lenders (RoW, Sept. 4/01). At the time, the receiver, Pricewater-houseCoopers (PwC), told RoW that a diverse group of companies had expressed interest in purchasing the assets of the bankrupt CLEC. However, industry analysts predicted that the company’s spectrum licences could be left on the table and that not many companies would be interested in them. PwC was unavailable for comment at press time. It’s no secret that LMCS licensees have had a hard time in deploying services. The only success story to date is Stream Intelligent Networks Corp., which is using its spectrum in point-to-point systems providing high-capacity connectivity between office towers. Industry Canada is well aware of the failures and is trying to find a remedy. The department is looking at aligning its LMCS allocation with the LMDS spectrum allocation in the United States. It is currently seeking comment on allocations from 3 to 30 GHz and part of that consultation will focus on LMCS (RoW Update, Jan. 28/02). "I think we should have the benefit to have that consultation and to know what those related allocations are going to be before we think about re-licensing this spectrum," Connolly tells RoW. Time is on the side of the government, Connolly adds. "We’ve got a number of parties who purchased similar spectrum in the 24/38 GHz who for the most part aren’t able to pursue their plans because of the current economic climate, the equipment situation, and any number of reasons."

Maxlink’s licences revoked; department considers realignment of LMCS allocation

News | February 5, 2002

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