Inukshuk’s Craig Wireless spectrum scoop to give Bell, Rogers stronger wireless positions

Broadband service provider Inukshuk Wireless’s acquisition of British Columbia and Manitoba WiMax spectrum from Craig Wireless Systems Ltd. will position Inukshuk to gain a stronger foothold in the wireless market, analysts say. Following the announcement of the $80 million transaction, wireless market observers said the sale could give Inukshuk investors BCE Inc. and Rogers Communications Inc. a stronger position outside of Ontario, where Bell and Rogers have large customer bases. “It gives them their own spectrum in areas that weren’t theirs before,” said Roberta Fox, a senior partner with Fox Group Telecom Consulting, a Mount Albert, Ont. advisory firm. If the spectrum sale goes through—Industry Canada must approve it—Inukshuk will likely use the infrastructure to roll out new wireless services in British Columbia and Manitoba, said Michael Rozender, head of Rozender Consultants International, in Grimsby, Ont. “I think they will do something with it,” he said, adding that he has heard other industry watchers saying Inukshuk might sit on the spectrum with an eye toward selling it to another company as it appreciates in value. But Rozender said he doesn’t buy that line of thinking. Bell has seen Clearwire Corp., a US wireless broadband service provider that’s rolling out WiMax service south of the border, in operation. In 2005, Bell invested US $100 million in Clearwire, giving the Canadian carrier “a ringside seat” for Clearwire’s WiMAX deployment, Rozender said. Bell, and by extension, Inukshuk, has the experience to help deploy WiMAX on the Craig Wireless spectrum in the future, he said. Craig Wireless was preparing to implement WiMax before the spectrum sale, but the company put those plans on hold when it recognized an opportunity to sell the infrastructure, said Drew Craig, the company’s co-CEO. “The company has a history of buying spectrum and selling it when we feel the time is right,” he said. “In this case, it was a little bit more of a difficult decision, given that these are the company’s legacy assets, particularly in Manitoba, where the company was founded and started ... But we see great opportunities around the world in the 4G space. So the company made the decision to consider the sale of the Canadian assets, to use that capital to build out what we have, and also to look for other spectrum opportunities around the globe.” In Canada, Craig Wireless had spectrum only in Manitoba and BC, so it would have been impossible for it to develop a national customer bases. Elsewhere, the firm has national licences, Craig said. The $80 million will fund developments outside Canada. “This allows the company to focus its efforts on building out our markets in Greece and California, and getting a customer base to the point of profitability in those markets,” Craig said. The sale doesn’t indicate that Craig Wireless has lost confidence in WiMax technology. “Our regional focus before we went down this path was to look at building networks in Canada, and we were a long way towards commercial deployment in Vancouver,” Craig said. “But this opportunity came along, and we decided to seize it.” Craig Wireless has “several thousand” customers on pre-WiMax service in Manitoba and British Columbia, but they won’t be customers for much longer, Craig said. “At a certain point in time, we will discontinue service in Canada. I’m not exactly sure what Inukshuk’s commercial plans are. We were making arrangements to make the transition for those customers as orderly as possible.” Customers often run the risk of losing their service when they opt for something new, like wireless broadband, Fox said. “If you’re going to try the next generation of anything, you always have to question if the suppliers are going to be around to support it.” Rozender said the wireless broadband market is heating up: Woodstock, NB-based Barrett Xplore Inc. announced earlier this year its plan to lease Ka-band spectrum on Loral Space & Communications Inc.’s ViaSat-1 satellite. Scheduled to launch in 2011, the new satellite could make Barrett a major broadband contender. “That’s going to give Barrett a really big footprint over a substantial part of Canada,” Rozender said. “They’ll be promoting the hell out of this once they put that bird up.” Inukshuk didn’t respond to requests for comment. news@thewirereport.ca

Inukshuk’s Craig Wireless spectrum scoop to give Bell, Rogers stronger wireless positions

News | April 1, 2010

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