Business

Airing Out airBand

The days of money galore and massive national rollouts in the fixed wireless industry are gone forever. The future belongs to cautious, fiscally responsible companies like Dallas-based airBand Communications.

Who?

Exactly.

by Gerry Blackwell [October 26, 2001]

airBand Communications uses 5.8 GHz unlicensed U-NII as well as licensed spectrum to offer 1- to 10-Mbps Internet access services to businesses in four markets in the southwest: Dallas, Fort Worth, Houston and Phoenix.

The company, headed by former Adaptive Broadband executive Andrew Lombard, announced in July 2000 that it had raised $45 million in first-round financing. It launched service in Dallas in November 2000, Phoenix and Houston in April 2001 and Fort Worth, a Dallas suburb, last month.

airBand CEO and founder Andrew Lombard won't say how many customers the company has today but claims he's adding 75 to 150 each month and is winning better than 50 per cent of the new T-1 and higher access business in those markets.

But here's the remarkable thing about airBand. "Those four markets," says Lombard, "represent a fully-funded business plan. If we meet our numbers, we can be a self-sufficient enterprise with just those four."

Not that airBand wants to remain a narrowly regional player, but the reality is, it costs money to expand—and money is tight right now. airBand won't risk what it has already built by expanding at any cost. "We didn't want to go and build beyond our current cash ability to sustain the business," Lombard explains. "We think that's a wise move on our part."

So the company will watch and wait to see if the capital markets recover. If the pendulum swing begins soon, he says, airBand may be able to go back to the market by end of first quarter 2002. But if things get worse, that time line will be extended.

And that's okay too.

"At the right time," Lombard says, "airBand will announce a new round of funding to a capital market that is more receptive or at least one that has the capacity to look at new deals."

"The difference between us and most companies is that they have to go back to the markets on a time-specific basis because of their ongoing needs for more funding. We're in a position where we can decide when to go back to market. We don't need this funding."

As long, that is, as airBand is content with being a four-market company. Which, ultimately, it's not. It sees itself eventually being a national player. But it's willing to bide it's time and expand slowly.

Ensuing expansion
The next moves—if and when they come—will probably be within airBand's current southwest orbit. Austin, San Antonio and Tucson are likely next targets. Then places a little further afield such as Oklahoma City, St. Louis, Kansas City.

"Then on the northern side, there's Chicago," Lombard says with obvious relish. "The Chicago metroplex is a really great market for the types of services we offer."

While it expects eventually to be there, the coastal markets are lowest on the company's priority list, partly because of anticipated difficulties getting roof rights for placing antennas.

It's clear airBand has high ambitions. But it was lucky enough to come into the market at a time when it was all but impossible not to learn from the mistakes of the Teligents and WinStars. So it will wisely wait.

In the meantime, it is building a solid business in its four southwest markets. Lombard figures the competition will be mainly wireline carriers for the time being. And if his estimates of new business market share are accurate, airBand should more than hold its own against them.

Within 12 months, he concedes, more serious wireless competition could begin to appear as funding becomes more available. But by then, he points out, his company will be almost three years old.

"We'll be deeply entrenched and penetrated in multiple markets—maybe just the four we're in now, maybe a handful. We'll be into the several thousand customer range."

In other words, airBand will be tough for a newbie to knock off.

Plus, the company expects by then to be offering a number of value added services that will differentiate it further: virtual private networks (VPNs), managed firewall services, Web hosting, secure, encrypted e-mail, etc.

"These services need time to develop, though" Lombard says. "It takes time to position them from the marketing perspective. You need brand awareness."

Dint of discretion
He has no doubt airBand will get there. But timing, again, is everything. Indeed, patience, these days in the wireless Internet industry, may be the most critical of management virtues.

The company also hopes to broaden its customer base in a couple of directions. Most of airBand's business today is small-medium enterprises—with a couple of multinationals that are the exception to the rule.

The company serves them with 5.8 GHz point-to-multipoint networks powered mainly by equipment from Axxcelera Broadband Wireless—formerly troubled Adaptive Broadband, now revitalized after its recent acquisition by Moseley Company of Santa Barbara CA—and Cisco Systems Inc.

But a year from now airBand expects to be selling to bigger companies with bigger bandwidth needs, Lombard says. The company can deploy point-to-point connections in licensed 16, 17 and 23 GHz bands using equipment from Ceragon Networks Ltd. and others.

airBand is also exploring Wi-Fi LAN opportunities, including public access initiatives—although Lombard can't or won't say anything yet about what the company is doing in this area.

And further out on the horizon is a whole new market—residential. The price of customer premises equipment remains the major obstacle to entering the residential market, Lombard says.

"[The downward trend in CPE pricing] is a curve we monitor often," he says. "It will take some time to get to a point where residences can be affordably provided with service. But it's certainly a future plan of ours."

There it is again: time. Biding your time. Being patient. Not, as B.B. King warned, making your move too soon. We're guessing this is what it will take to succeed as a wireless ISP going forward.

—End