Aloha Buys Competitors in 700 MHz Consolidation Play
Aloha Partners announced Wed. a potentially significant consolidation in the still-to-develop 700 MHz broadband wireless market, buying 2 of its top competitors, Cavalier Group and DataCom Wireless. The closely held company was already the nation’s largest holder of 700 MHz spectrum, while the others were #2 and #3, respectively. With the mergers, Aloha said it will own spectrum in 244 licensed markets covering 175 million POPs.
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Much of the spectrum may not be usable until the completion of the DTV transition. Aloha didn’t release financial details but said it expected the deals to close in the first quarter. “Both companies recognized that 700 MHz was fragmented and needed to consolidate,” said Charles Townsend, CEO of Aloha. “With 60% of the U.S., Aloha has now reached critical mass and is well positioned to drive a consistent use of the spectrum, attract key strategic partners and launch associated services nationwide.”
“Aloha markets were originally concentrated on the West Coast, whereas Cavalier focused on areas on the East Coast,” said Wirt Yerger, founder of Cavalier Group. “We have worked closely with Aloha since 2002 to develop the 700 MHz band spectrum… It was only a matter of time before we combined to create a nationwide network.”
Aloha, the highest bidder for UHF channels 52-59 in 2002, is targeting 3 primary markets, including rural broadband, spokesman Scott Wills said Wed. Wills noted that 700 MHz with its favorable propagation characteristics, makes it well suited for less populated areas. Using 700 MHz, the company can cover an area 2-3 times as large as that which could be covered using PCS or MMDS spectrum with the same number of stations. “If we were to put up a cell site in a rural area and assume one person per mile we could cover 700 people,” Wills said. “You put in a $30,000 base station and at $50 a month you have a good business.”
Wills said Aloha also will target the 3-4 million public safety employees who need access to better communications in rural America as well as business people who need both voice and data service. Aloha has identified 40 million real estate agents, sales people, construction workers and others who may need better communications outside of urban areas. Aloha also sees a market for streaming TV and video to mobile devices, Wills said.
To fully use the spectrum it bought, Aloha has been lobbying the FCC to change its rules to allow operations adjacent to current TV broadcasts. Without the change, Wills said Aloha has 26.5 million MHz POPs “free and ready to use.” In a June 2004 filing, Aloha asked the FCC for a rule change that would allow it to test its technology on channel 59 in Tucson. The company is still awaiting FCC action.
“Aloha believes that 700 MHz will be the most effective frequency band to provide wireless broadband to underserved rural America, public safety, and small businesses,” Aloha said. “Nationwide, over 150 million Americans will be able to receive 700 MHz broadband service if the Commission permits 700 MHz licensees to operate on channels adjacent to broadcasters.”