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AT&T Sells Fixed Wireless Venture For $16 Million

AT&T is closing the book on yet another broadband Internet venture, this time selling its fixed wireless equipment division and most of its employees in Redmond, Wash., to Netro Corp. for $16 million and a stake in the company, officials announced Tuesday.

When the acquisition is complete, Netro will own AT&T's Angel product line and technology of fixed wireless equipment, along with the technicians and manufacturers who have the know-how to make the systems run smoothly.

Allan Evans, Netro chief scientist, expects to put the equipment to good use in markets throughout Europe and Latin America, but has no plans for a North American expansion.

"With the North American market, with Sprint, the large carriers and pretty much all the large players in the MMDS (multipoint microwave distribution system) space right now, we're not going to (enter now)," Evans said. "We're certainly interested in following its development in the North America markets, but the primary focus for us is to leverage our sales and distribution competencies in the international market."

It's the next-to-last chapter in Ma Bell's hopes to capture every sector of high-speed Internet access and a classic cautionary tale that just because you're big enough to enter any market you want doesn't necessarily mean you should enter any market you want.

AT&T Wireless took over the broadband venture in October of 2001, a befuddling move considering the market it found themselves in; while the spread spectrum offering operates on wireless equipment, it's similarities end there.

Fixed wireless is a broadband offering more in line with cable Internet and digital subscriber line (DSL) service, requiring the thought process of an Internet service provider (ISP), not a wireless phone division.

With fixed wireless -- unlike digital wireless phone service -- there's issues of Internet connectivity, setting up the home computer or business terminal with self-install software, IP addressing and email services. While gaining popularity with local and regional ISPs around the U.S., AT&T Wireless found out the hard way rolling out the service is a completely different animal when launched nationwide.

And, as AT&T Wireless support techs surely found out, selling a broadband Internet connection is a lot different than selling 3,000 air time minutes and a Nokia wireless phone. That's evident in the fact sales reps were only able to sign on 47,000 subscribers across 10 of the country's biggest markets in the four years fixed wireless service was available.

Gideon Ben-Efraim, Netro chairman and chief executive officer, is understandably excited about boosting his product line at the relatively small price of giving up a minority stake in his company and $16 million.

"In the last several months, we had reviewed several strategic initiatives and decided to focus on the next-generation, low frequency fixed wireless access market to address the international emerging markets that require a voice and data wireless solution to complement a limited wireline infrastructure," he said. "After reviewing many options, we have determined that AT&T Wireless' fixed wireless technology is the best platform to meet our market vision and extend our broadband wireless access product portfolio."

AT&T Wireless' representative on Netro's board of directors will be Lew Chakrin, AT&T Wireless executive vice president of corporate strategy and planning. He joins Ben-Efraim and five others who will chart a course for the suddenly much-larger corporation.

Netro's operations to date have focused on business-class services using an asynchronous transfer mode (ATM)-based line of sight technology operating in the 10-39 GHz range of spectrum. The service is not suited for residential use due to the high cost of the equipment involved.

With the addition of AT&T Wireless' know-how and equipment tailor-made to the residential community, Netro plans on bringing its newly acquired service to the high-end residential and small-office, home-office (SOHO) workers, using its AirStar service as a backhaul service for those users.

Netro also gets the benefit of 126 former AT&T Wireless employees (notably John Saw, AT&T Wireless vice president of engineering) who have seen their broadband "baby" from day one grow from just an idea to a nationwide service. The technicians will stay at the manufacturing plant in Redmond after the acquisition is completed, which officials expect to take roughly a month.

After several years in the broadband market, Tuesday's announcement marks a nearly-complete whitewash of AT&T's involvement in broadband Internet services in the U.S.

The company spent billions acquiring the cable networks of Tele-Communications Inc., and the MediaOne Group in 1999, making AT&T the largest cable operator in the nation. What ensued was years of policy-wrangling with the Federal Communications Commission and Federal Trade Commission over market caps and negotiations with other cable owners to divest some of its properties.

In the end, AT&T agreed to exit a joint venture interest in Road Runner and focus on @Home, the largest broadband ISP in the nation. We all know the end game in that move; one of AT&T's divisions, AT&T Broadband eventually took control of the ISP and used it to sweeten the pot for a sale to Comcast in December.

The only broadband venture AT&T has an interest in, for the time being anyways, seems to be DSL. Last year, the company bought $135 million worth of equipment from now-defunct NorthPoint Communications and immediately put the DSL access multiplexers (DSLAMs) in moth balls.

It's expected AT&T will use the equipment to boost its telephony presence around the U.S., adding local voice-over-DSL (VoDSL) to its current cable telephony and long-distance services.