Wi-Fi News Briefs

• TESSCO, Wireless Business Barometer?
• GRIC Expands Wireless Roaming Network
• Wi-Fi Positioning System

by ISP-Planet Staff [October 22, 2002]

TESSCO, Wireless Business Barometer?
If you were asked to find a number that could serve as a financial barometer for the Wireless Internet Service Provider (WISP) sector, you would not go to WISPs for a tally. Across the United States, WISPs are typically small, independent businesses, and there are thousands of them. But they are privately held and do not readily disclose financial information to the general public.

Instead, you could go to companies supplying the WISPs, such as TESSCO (Nasdaq: TESS), a Sears Roebuck of the wireless goods and services. The company sells and supports wireless products from a large number of different manufacturers. Last week, the company released headline-making financial results for the third quarter. TESSCO reported "30 percent earnings per share growth in the quarter" as well as "record revenues," which stood from a series of otherwise gloomy earning reports for the ISP industry.

TESSCO's 13 percent growth was driven by a 54 percent increase in sales of mobile devices. It was held back slightly by a 7 percent decrease in sales of network infrastructure products and a 2 percent decrease in sales of test and maintenance products. This suggests that although WISPs are not landing new customers, those business customers that they do have are spending more on WISP services.

Overall, TESSCO recorded $70.4 million in gross revenues, with net income of $1.2 million. The only dark cloud on this otherwise sunny picture resulted when a water main break flooded the company's Global Logistics Center on October 14, 2002.

Robert B. Barnhill, Jr., TESSCO's chairman, president, and CEO, said "The TESSCO team went to work to restore all data, and to divert phone and data services to our other facilities in Hunt Valley, Maryland, and Reno, Nevada. With escalated emergency responses from Verizon, Sprint, UUNet, USi, and our hardware vendors, impairment of service to our customers and impact to our sales throughput should be minimized and restored to near normal within days."

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GRIC Expands Wireless Roaming Network
GRIC Communication's network just got a little larger. The company has already signed up more than 300 top-tier ISPs in 150 countries, aggregating approximately 19,000 Points-of-Presence—including 400 wireless hotspots. The company recently added Wi-Fi rollout agreements with SingTel of Singapore and NIFTY, of Japan, Fujitsu's Internet service division.

But a third Wi-Fi-releated deal was particularly ambitious. GRIC teamed up with Hanaro Telecom to roll out 5,000 GRIC-compatible wireless hotspots in China by the end of 2002.

Dr. Hong Chen, GRIC's founder, chairman and CEO, said that the company's virtual roaming model has allowed it to remain very lean, incurring a very low overhead. He noted that the company spent a great deal of money to build a world-class routing and settlement system—with Network Operation Centers (NOC) in Milpitas, Calif. and powerful routing hubs in San Jose, Singapore and Germany—that gives GRIC a defensible economic position, and that future capital expenditures will be minimal.

In its last quarterly report, covering the period ending on July 31, 2002, GRIC reported a loss of $3 million on $8 million of revenue. The company had over $22 million in cash and short-term investments

The next two quarters will be the real test of GRIC, as its quarterly report says the company expects to generate a profit in the last quarter of 2002, and to become "cash flow positive immediately thereafter."

Big deals, such as those announced this week, should help, but the bottom line will deserve closer attention. With a VISP-like infrastructure, GRIC has low recurring costs, which makes it much easier to adjust the bottom line. "Our capital expenditure is $100,000 per quarter," said Dr. Chen.

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Wi-Fi Positioning System
A lot of attention is being paid to Global Positioning Systems (GPS), a satellite-based network that tells airplanes and missiles their exact locations. Could 802.11-based networks ever be a substitute? Probably not on a global sale, but on a very local scale, you might find an application.

A company called Ekahau unveiled its Positioning Engine 2.0 (EPE 2.0) for 802.11 Wireless Local Area Networks (WLANs). The company claims the system is accurate to within 3.5 feet (about 1 meter), which enables the system to provide real-time guidance and mapping of wireless PDAs, laptops and any other device that can sustain an 802.11 connection.

The company says the solution is software-only and consequently requires no proprietary hardware. Wi-Fi equipment maker Agere seems enthusiastic about the product. Roman Polz, Agere marketing director of client systems, said the "combination of Agere and Ekahau technologies enables our customers to layer a new class of applications with Agere's 802.11 WLAN systems architecture."

The software is available directly from the company, and is priced starting at $595. A free evaluation copy is available online.

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