By Steve Stroh
I've known of MetroBridge Networks, an impressive Broadband Wireless Internet Access (BWIA) Service Provider (SP) in Vancouver, British Columbia, Canada and Phoenix, Arizona for some time. In brief, their business model is to provide mid-to-high-speed Internet Access via Wireless to business and goverment, scaling to enterprises, in mid-to-large urban markets. MetroBridge just completed an Initial Public Offering (IPO) and it seemed a good time to check in with them to discuss their post-IPO plans. I interviewed MetroBridge Chief Technology Officer and Co-Founder Dorian Banks the week of August 5, 2007.
Technology and Products
For access, MetroBridge uses license-exempt spectrum exclusively and has not had any significant problems doing so to date. It formerly used Wi-LAN systems, but in the "death throes" prior to Wi-LAN 's exit from the BWIA systems business to now only licensing patents, Wi-LAN's quality control slipped dramatically, forcing MetroBridge to find another primary supplier for BWIA systems - Alvarion. One of the most impressive traits that MetroBridge notes about Alvarion is that their systems' firmware is very stable and reliable, in marked contrast to other, smaller vendors whose firmware is "perpetually in beta" and much less reliable.
When making use of diverse wireless systems spanning from 5 GHz to
80 GHz, one edge MetroBridge makes good use of is a senior staff
member with a Master's degree in Radio Frequency (RF) Engineering, who MetroBridge uses not only to design high-reliability RF links, but also to troubleshoot RF issues. MetroBridge is making good use of the new 5.4 GHz band in Canada. Banks explains "Using 5.4 GHz gave us some relief where we had saturated rooftops, some with more than twelve radios". Unlike in the US, the strict(er) "Dynamic Frequency Selection, version 2" (DFS2) won't take effect in Canada for another year, giving MetroBridge a larger pool of 5.4 GHz systems to choose from. MetroBridge is exploring use of the proposed 3.65 GHz (3650) band for future US deployments, and has already applied for experimental licenses in some US markets where it expects to complete acquisitions or greenfield deployments. While 3.5 GHz is available for use in Canada (as opposed to the US), speculators bought up all 3.5 GHz at auction and will only lease it or sell it at very high prices. Since MetroBridge has few issues operating in license-exempt spectrum, the (effective) lack of available 3.5 GHz spectrum (2.3 GHz and 2.5 GHz is similarly encumbered) isn't an issue.
In its extensive backhaul networks, MetroBridge builds out a very
robust, fault-tolerant, high-capacity "ring" network (see photo of a
backhaul radio at right) with no single point of failure in the radio
or fiber backhaul, mostly with BridgeWave Communications 60 GHz license-exempt and 80 GHz "licensed lite" 1 Gbps+ systems and Dragonwave
100 and 200 Mbps systems. MetroBridge was an early customer of
BridgeWave and have seen
the BridgeWave systems improve from having a range of merely 600m to
3.5 - 4 Km. MetroBridge's urban backhaul rings are built with 1 Gbps
links; suburban rings are built with 100 or 200 Mbps links. When a new
high-capacity customer (100 Mbps, 200 Mbps, or 1 Gbps) is added,
Metrobridge will add that customer premise to an existing backhaul ring
if it's geographically feasible. Otherwise, the customer premises is
added as a "spur" to the ring. In the past quarter, MetroBridge has
installed two 1 Gbps links to customers, and in the past have installed
several 2.5 Gbps links and have quoted a 5 Gbps link.
MetroBridge has throughly exploited the marketing value of the notoriety of WiMAX to investors, analysts, and press to more easily explain the nature and potential of its business (such as headline WiMAX stories in the Wall Street Journal). In actuality, MetroBridge currently uses "0% WiMAX" because, to date, there aren't any fully certified WiMAX systems available for the license-exempt spectrum MetroBridge uses, except possibly for the (currently experimental) 3.65 GHz band, for which it plans to use Redline Communications systems.
One key differentiation that MetroBridge touts to its most technically demanding customers is a critical issue for a company that sells 100 Mbps, 200 Mbps, and 1 Gbps links - superb fiber backhaul connectivity. MetroBridge uses five different fiber bandwidth providers in Vancouver and a 1 Gbps fiber to Seattle's Westin Building fiber hub which allows MetroBridge to offer "direct peering" with Internet hubs such as Microsoft, Akamai, and approximately 75 other direct peers. MetroBridge intends to extend this strategy to all of its new markets.
Projected Use For Their Investment Capital
The total
raised in MetroBridge's actual IPO was approximately $8M Canadian, with
an additional $1.7M Canadian privately invested just prior to the IPO.
With those proceeds, MetroBridge intends to commence acquisitions of
other BWIA SPs, both small "Mom and Pop" Wireless Internet Service
Providers (WISPs) and SPs of similar scale to MetroBridge in "markets
ten through seventy" (the 10th to the 70th largest markets in North
America). MetroBridge cedes the top nine markets to "the competition.
"Everyone else wants to play there, so competition is brutal" said
Banks. Although they aren't ignoring the rest of Canada, MetroBridge
expects the vast majority of their acquisitions to be US operations.
In
negotiations for acquisitions, with its publicly traded stock
MetroBridge can now offer a much more attractive "coin of the realm" to
prospective acquisition candidates. In previous discussions,
acquisition candidates were (justifiably) reluctant to accept private
stock. MetroBridge is so serious about acquisitions that it has hired a
dedicated Vice President of Mergers and Acquisitions whose first task
is to "inventory" the approximately 3,000 (their estimate) North
American BWIA SPs that are candidates for acquisition. Immediately,
MetroBridge expects to find two or three strong Broadband Wireless
Internet Access Service Providers in each of the 150 largest metro
areas in North America.
In their exploratory acquisition
discussions to date, MetroBridge almost always finds at least some
interest, and most are willing to seriously discuss the possibility of
being acquired. "We find that many, if not most of these guys are
running on empty," said Banks. "You can see it in their eyes - they're
stalled out trying to grow their operations without having been able to
raise much capital, do effective marketing, or grow a sales force.
Those are all things that we're prepared to take off their hands."
Banks states that MetroBridge has one current letter of intent issued,
and is close to that stage with a handful of others.
For
the remainder of 2007, MetroBridge hopes to complete two acquisitions
and one "greenfield" deployment (building out a new market without an
acquisition). In 2008, MetroBridge hopes to complete four acquisitions
and two greenfield deployments. For the foreseeable future, MetroBridge
intends to continue running billing and accounting, administration, all
Tier 1 and some Tier 2 support (see photo at right of MetroBridge's
Network Operations Center [NOC]) out of its operations in Vancouver.
Competition
MetroBridge
does not see their intended markets as "crowded"; their view is that
there is room in their larger target markets for two or three SPs of
similar size to MetroBridge, and in smaller target markets, one to two
such SPs.
As for who they expect to compete with for acquisitions and markets, Banks cited three:
- Covad's Wireless operations (acquisition of NextWeb)
- Sparkplug, Inc.
- Towerstream
Unlike NextWeb, Covad hasn't indicated whether or not it will pursue BWIA SP acquisitions or expand beyond its current markets in California. Sparkplug is venture-backed and has already done acqusitions / "rollups" very similar to what MetroBridge intends. Towerstream is also a publicly traded, "pure play" BWIA SP, but has only done one "acquisition" - taking over Speakeasy's shuttered BWIA SP operation in Seattle.
MetroBridge perceives its primary base of customer acquisition to be current (and often unhappy) customers of Incumbent Local Exchange Carriers (ILECs) such as AT&T, Verizon, and Qwest, as well as some Competitive Local Exchange Carriers (CLECs) such as (wireline-based) Covad. In Phoenix, MetroBridge's services have been very well received at the expense of Qwest.
Given Clearwire and Sprint's much greater funding, Banks is relieved
not to be directly competing with Clearwire and Sprint for (eventually)
mobile BWIA services versus MetroBridge's high-capacity fixed services,
but also in their choice of customers with the former targeting
consumers and small business versus MetroBridge not targeting consumers
at all, staying focused on business and enterprises. Banks expects that
the chilling effect of Clearwire entering new markets to motivate
"residential" BWIA SPs to be receptive to acquisition by MetroBridge
(which would then quickly reorient such operations to target business
and enterprise customers).
Conclusion
The rise of
WiMAX, Clearwire, Intel's investments in wireless, and general
recognition that Broadband Wireless Internet Access can truly be
effective competition in the last miles of telecommunications links has
helped set the stage for BWIA Service Providers such as MetroBridge to
prosper and grow rapidly at the expense of incumbent Telecommunications
Service Providers. But to do so requires sufficient capital,
experienced management, deep technical knowledge of wireless, and the
humility that, in the end, their business is simply "moving the bits"
back and forth between the Internet and the customer. Too many Service
Providers like MetroBridge make the mistake of thinking that they
"ought to be in high-margin services" like web hosting, only to
discover too late that they're effectively in head-to-head competition with every
other web hosting company on the Internet, and their limited resources
would have been much better spent focusing on becoming the best, most
cost-effective, most reliable "move the bits" company in their service
area. MetroBridge seems to get this profound change in paradigm from
the "business as usual" Telecommunications Service Provider industry,
and that knowledge will likely serve them well in tackling the new
markets that they choose to serve.
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written specifically for Broadband Wireless Internet Access / WiMAX
News by Steve Stroh. This article is Copyright © 2007 by Steve Stroh
(except for the photos, which were supplied by MetroBridge Networks).
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