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Nextwave plan begins to take shape – as IP Wireless finds a home

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Analysis Rags to riches broadband wireless operator NextWave has acquired TDD pioneer IP Wireless, completing a cluster of acquisitions that make a nonsense out of the age-old rule that operators should not own the technology they use.

IP Wireless, a California based start-up with much of its operations in the UK, is a leader in time division duplexing over CDMA networks. It has set out to make use of this technology in the public safety arena and in multimedia, and for mobile web browsing, and the technology allows operators to use the unpaired one way data spectrum that has been allocated in most European and Far East 3G licenses.

One of its most promising technologies is devoting this 5 MHz of unpaired spectrum to one way TV signals, which act as a multicast using existing cellular spectrum. NextWave is almost sure to be aiming to point IP Wireless technology at providing mobile TV services in its numerous 2.5 GHz and AWS spectrum holdings.

We describe NextWave as rags to riches because it was the company which bid $4.7bn for 95 PCS mobile licenses in 1996, but failed to pay more than a $500m down payment. This led to years of haggling with the FCC, much of it from the confines of Chapter 11 bankruptcy protection. Eventually it sold most of its holdings to Verizon Wireless after almost a decade when the valuable bandwidth lay unused and wasted.

It made its comeback when it came out of Chapter XI in 2005 with its hopes resting on WiMAX and went immediately for an IPO. In the recent AWS Wireless auctions it acquired 154 licenses in the AWS bands (1.7 GHz and 2.1 GHz). Although this is not an official WiMAX profile, several vendors, including Siemens, have already talked about adapting 2.5GHz 802.16 gear for this important spectrum.

But very few WiMAX operators have a ready made answer to how to go about offering triple play services in Wireless Broadband, and one of the best ways is to segregate a chunk of spectrum and offer multicast services.

A multicast network operates like MBMS in UMTS or BCMCS in CDMA, with each base station having access to TV content, but only sending it through the airways when there is at least one requesting handset. Once a second handset requests a mobile TV channel, it is directed to the right timings and tuning for the existing channel set up for the first handset.

This is the special expertise of IP Wireless and its TDtv system, which requires a single rack of $10,000 worth of TDD modulation equipment added to each cellular or WiMAX base station plus about $20 of chips added to each handset.

Sprint tried out the IP Wireless technology and went to the trouble of buying $10m of the company, and although CTO Barry West made admiring statements about TDtv at conferences, he concluded that a pure WiMAX multicasting system (one very complex one has already been specified on the IEEE 802.16e standard) with partners Samsung and Motorola, was the way to go.

NextWave bought IP Wireless for $100m upfront, split $25 million in cash and $75m in NextWave stock, plus a performance based portion of payment that could rise as high as a further $135m. This will be paid based against revenue milestones across 2007 to 2009 and most of this is payable in shares. The acquisition is expected to close in the second quarter of 2007 and IPWireless is expected to operate as a wholly owned subsidiary of NextWave.

What’s interesting is that this comes on the back of a series of other acquisitions that all seem to be aimed at making NextWave networks multimedia capable. It bought Packet Video back in July 2005, and just a few weeks ago Packet video acquired downloadable Java DRM company Secure Digital Containers.

Packet Video puts together mobile video offerings and designed some of the devices used by the US satellite radio companies, it has its own EPG (electronic program guide) technology and can manage middleware stacks on the handset.

IP Wireless recently conducted a variety of experiments with MobiTV, a company that has a great understanding of on-device multimedia software, and EPG. These were primarily to bring multicasting to the EPG alongside cellular distribution and DVB-H, and perhaps it has learned enough to impart some of the key considerations to Packet video.

Secure Digital Containers could provide the type of content protection that video owners demand of networks and yet have the flexibility of being entirely downloadable.

When we last interviewed Packet Video the company praised Secure Digital Containers and said it looked forward to the days when the handset was a generalized platform with downloadable components, like the PC and said that the latest version of Flash Lite, which will allow Flash 8 video on handsets, was one of the most important tools and will shortly be available on most handsets.

PacketVideo has already done work for Verizon VCAST, DoCoMo’s FOMA and Orange’s Orange World service in Europe and has worked with BREW, Linux, Symbian and Windows Mobile. SDC by comparison is just an 18 man company, but it already has deals with T-Mobile, O2, SFR, Amena, Telus, Telstra, Hutchinson 3 and Rogers Wireless in Canada and supports mobile music platforms such as Musiwave, WiderThan, Siemens and TA-Telecom.

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