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07/06/2009Q&A with Ashish Sharma, Alvarion VP Corporate Market Development on Open Range Communications and Aria $100+ Million Agreements
Alvarion has recently reached agreements with Open Range Communications in the US to deploy $100+ million Wimax networks in 546 markets in 17 states in the US and with Aria in Italy to deploy a nationwide network. Daniel Aghion, the Executive Director of W2i speaks with Ashish Sharma, VP Corporate Development at Alvarion about the challenges and key success factors in those landmark undertakings and what they mean to Alvarion.
Q: First, congratulations on the announcement of the agreement with Open Range Communications. This looks like a very ambitious project. Can you give us some details? A: I really believe that Alvarion and Open Range are making history with this project. We are bringing broadband Internet to underserved populations in the US, with a true 4G network technology. The deployment will focus on end users, consumers and businesses, in 17 states, more than 546 rural communities, eventually servicing over 6 million people.
Q: Much of this agreement relies on RUS funding, is this part of the stimulus plan? A: No, this effort actually predates the stimulus plan. $ 267 million is provided through the RUS program that the US Department of Agriculture has been running for several years. Another $ 100 million comes from One Equity Partners, the private equity arm of JP Morgan.
Q: In such a competitive environment, what would you assess were Alvarion’s major advantages for this project? A: You are right, the competition was very stiff. Our long term presence in the US rural market certainly was a plus: over a decade, we have developed a strong knowledge of the players there, moving through various technologies up to WiMax. That also gave us an in depth understanding of the products and solutions to optimize business cases. Last but not least, we have leading technologies for this market. Finally our equipment were first to be RUS approved.
Q: What will be the primary challenges for these deployments to be successful? A: I believe the challenge, with any project of this scale, will be to roll this out quickly. So we have to focus on delivering on time, with the best quality of service, on a very large scale.
Q: It is my understanding that the project will start with 5 markets to be deployed during the fall, are all deployments going to follow the same architecture and business model or is Open Range going to test out different options? A: I believe that most of the early markets deployed in this project will have a very similar architecture and model.
Q: You mention in the agreement that Alvarion will supply equipment and services, what kind of services are you committed to deliver? Alvarion will be the lead system integrator responsible for integrating all of the solutions provided by the different partners, point to point links, IP core and so on. We have provided those same services before, but not on such a large scale. We will also provide RF surveying and network planning services as well as network equipment commissioning, and will work with subcontractors as needed in any given geography. Alvarion is not responsible for the deployment services itself, so we do not have to change our resources strategy significantly. We will have to build incremental services capacity, but most of the effort will be carried by Open Range and the subs contractors.
Q: Open Range has owned and operated a portfolio of towers for quite a while. What are the other assets they are bringing to the table? A: Beyond the towers, Open Range has two specific strengths: a partnership with L3 Communications, giving them long term access to L3’s nationwide fiber network and allowing them to tap into that network for backhaul; and a partnership with GlobalStar to use the ATC spectrum. ATC spectrum is in the upper range of the 2.4 GHz band, between the unlicensed WiFi and the mainstream WiMax 2.5 GHz.
Q: Do you have equipment available for this unusual band? A: This will require some customization that we will provide. We will have to carefully design the filters, as this ATC band is quite close to the WiMax band and the unlicensed WiFi band.
Q: Some WiFi services will also be offered? A: More accurately, Open Range will offer the ability to connect to existing WiFi networks in any given market. Lots of people and business already have WiFi networks deployed for their laptops and desktops, and we will leverage this.
Q: Beyond the technical aspects of this deployment, do you anticipate a need for Open Range and /or Alvarion to engage in community relations in the targeted markets? A: Though we have nothing planned in this area at this stage we anticipate to assist Open Range if and as they engage in community relations. Regarding services to local governments, as I mentioned, the primary focus at first will be consumers and businesses. We will assist Open Range in assessing the possibilities of branching out to other services to local authorities at a later stage and leverage our expertise in areas such as public safety, video surveillance and traffic management to name a few.
Q: Alvarion has now entered into 3 major publicly announced agreements to service rural communities in the US: Open Range, MainStreet Broadband and Digital Bridge/NRTC. Any overlap in those projects? A: Not that I am aware of. On the contrary, those projects appear to me to be complementary, to ensure the best possible access to the greatest number of users. In terms of broadband access, we are still in the last century, with a very large population in underserved areas. More players can bring us into the 21st century!!!
Q: Last week, Alvarion also signed another large scale project in Italy, with Aria. How does this compare with the US project we have just discussed? A: In terms of strict geography comparison, this is smaller that the US project. Our assessment is that it will be over $20 million project in the next two to three years. Our contract with Aria is for a nationwide deployment throughout all of Italy where Aria owns WiMax 3.5 GHz spectrum that covers 100% of the country, and is one of the biggest players there. The network that will be rolled out will cover all 21 regions of the country, with both urban and rural characteristics.
Q: What gave Alvarion the edge in this case? The same assets as for the US? A: Yes, but I would add that Alvarion has had a very strong presence in Italy for a long time, with multiple customers and a great team there. A few months ago we signed another nationwide agreement with LinkeM for the deployment of a large network in the 3.5 GHz range, that will cover more than 80% of the population in Italy.
Q: Alvarion previous contracts in Italy were more regional, like in the Piedmont and the Upper Adigio rural and mountainous regions that leveraged European Commission funding. Will these new contracts offer different services beyond Internet access? A: These are different operations in the sense that the large scale deployments are more focused towards portable broadband services, with CPEs, and potentially PC Cards, with the equivalent of city wide hot spots. Those networks will not be offering mobile voice services, but rather broadband data in the form of internet access with residential and business VoIP services and therefore not be competing with existing cellular networks. The 3.5 GHz band works well for those applications. When you offer added enhanced services like video and so on, the focus is more on enabling portability through small screen devices such as laptops which can be carried anywhere in the coverage area, so you can utilize the 3.5 GHz band creatively. It is a matter of offering the maximum choice of services for markets that are part mature and part underserved.
Q: On a broader viewpoint, over the past months, Alvarion has won large contracts for projects in Nigeria, Spain, and other countries, some quite large. Can you provide us with an update on how those are proceeding? A: The main message is that WiMax is here as the 4G technology with great momentum. These projects you mentioned, as well as some other recent projects we announced in Norway, Russia and Taiwan will be deployed commercially in the next few months and will showcase the capabilities of the technology to satisfy the demand out there.
Q: Over the last year, Alvarion has launched several vertical market initiatives in support of public safety, intelligent transportation and the smart grid. Do you anticipate all these successes with “carriers” for public access networks to divert resources and attention from those vertical market initiatives? A: Not really, we are bringing our WiMax expertise to those markets, focusing on solutions customized for their specific requirements. These markets had up to now very fragmented technologies. We can provide standardized technology with customization which we are good at. Our vertical market initiatives have their own dedicated resources from R&D to engineering, to marketing and business development which will be unaffected by the requirements to service those large service provider opportunities.
Q: Since last fall, Tzvika Friedman, Alvarion’s CEO, has several times expressed to analysts concerns about the postponement of projects due to the recession. Any indication of changes in this trend? A: There is a huge pent-up demand for broadband all around the world, and we continue to see it, recession or not. What Tzvika mentioned is that recessions bring tighter budgets, so spending is more controlled and more careful. There is no question of if, it is only a question of when in terms of actual roll outs.
Q: In conclusion, what would be the major challenges facing Alvarion in the near future? A: We have major initiatives around the globe. Our focus is a seamless transition for our customers, as their success is our success. Execution, timely delivery, with the most reliable support, is essential. We are confident that Alvarion will continue to lead in this market well into the future.
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