xG Technology Inc, a company developing wireless WAN technology to rival cellular and WiMAX in spectrum that is unlicensed in the US, has altered its strategy for addressing the European markets to avoid confrontation with incumbent carriers.
The Sarasota, Florida-based company floated on London’s junior exchange, the Alternative Investment Market, in November and is now in the unusual position of having a market capitalization of $1.8bn while still being pre-revenue.
The technology underpinning its xMAX WWAN offering is called Flash Signaling. It was developed by the company’s president and CTO Joe Bobier and is covered by nine US patents, with a further eight pending. It uses a technique called single-cycle modulation, which means an individual cycle of RF energy can carry a single bit of information, where rival technologies require hundreds of thousands of waves to convey the same amount.
The company claims this enables either an amount of data to be transmitted over a given distance at much lower power than cellular or WiMAX, or the data to go much further at the same power level as those technologies. It holds the promise of enabling wireless broadband services, with neither the license fees nor infrastructure cost of dense base station networks that characterize the more established alternatives in unwired connectivity.
CEO Rick Mooers said the first priority for xG is to get services up and running in the US where it will operate in unlicensed spectrum. The business model is to strike deals with operators that don’t have licensed spectrum, such as CATV operators and CLECs, enabling them to use its technology.
The company took its PHY into chips last September, and while it has commissioned both handsets and base stations for it to sell under its own steam (the handsets are being developed by Swedish engineering boutique Lundinova), its ultimate gameplan is to be the silicon provider for others to make the network infrastructure and devices.
Handsets and base stations are really just a systems integration issue, said Mooers. He said xG expects to start selling base stations this month, with the first handsets becoming available about 30 days after that. Flash Signaling is a technique the company believes will be applicable to other parts of the electromagnetic spectrum, so it can later take it into fixed-line communications. It refers to the wireless version, which is focused primarily on mobile VoIP services, as xMAX.
xG told Computer Business Review last October that it planned to start work on the international market, and given the political sensitivities of Europe, where incumbent carriers hold great sway with their respective governments, it said it would seek partners with access to licensed spectrum.
Now, said Mooers, the model for Europe has evolved further. He said licensed spectrum will still be the focus, but the idea now is to establish a company to build and run the network and offer it as a common infrastructure on which multiple carriers would be able to run services as opcos without the cost or ownership of the physical assets.
He said this would be a less confrontational approach, in that the incumbents themselves could take advantage of the network. At the 3G level, there are already examples of network-sharing in Europe, with big names like Vodafone and Orange announcing plans along these lines in certain countries.
xG may also have moved in this direction thanks to its prospective partners. In its first financial statement last week, the company said it was in discussions with two large international partners for the exclusive rights to deploy xMAX in the UK and Mexico. It has gone public with the partner for Mexico, Telefonica, which has signed a deal to run a trial there, but has not revealed the identity of the UK partner.
However, there are strong suspicions that it is National Grid Wireless, a division of the country’s national electricity transmission network. National Grid Wireless describes itself as a provider of turnkey infrastructure solutions and claims to be the leading provider of infrastructure to mobile telecommunications operators in the UK, with almost 14,500 sites. Its customer list includes Vodafone, T-Mobile, 3, O2, and Orange, as well as the BBC, satellite operator BSkyB, and others.
The idea would be for National Grid Wireless to run the network, with carriers bringing their spectrum licenses to bear while avoiding the cost of building their own infrastructure. As to whether there will be room for a large number of such opcos, in the event that the technology fulfills its promise, Mooers said that by the end of the first quarter of 2008 when it starts to address the international market, xG will qualify as a 4G technology. We’ll be achieving 100Mbps on mobile and 1Gbps on fixed, so it will be available for all, he said.
In the US, Far Reach Technologies is completing a test in Fort Lauderdale, Florida, with a second beta in Daytona Beach due to get underway when it finishes.