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Company says customer service will not decline

Has technology leapfrogged past Wireless One?

By LYNNE WILBANKS JETER

MBJ Contributing Writer

Not too long ago, Wireless One was counting on Warp One, their newest product, to sell at warp speed. Many folks, particularly clients and investors, are speculating about what happened with the product and the company.

Ashby Foote III, manager of the Mississippi Opportunity Fund at Vector Money Management in Jackson, said Wireless One was part of their portfolio until last August.

“We became convinced, regrettably, that the competition they were receiving from the dish companies was going to be more than they would probably be able to succeed against,” Foote said. “It was unfortunate that Wireless One was a victim of new technology that leapfrogged what they were offering and made it extremely difficult to compete in the marketplace. Big corporations could subsidize the initial rollout and come in with low-cost satellite dishes to sell into the marketplace. All the marketing power behind the huge electronics companies, such as PrimeStar and Hughes Electronics, proved too much for them to overcome.”

When Warp One was introduced to the Jackson area last spring, it was targeted as one of only four markets for the initial product launch. Henry Burkhalter, president of Wireless One, conceived the idea of an innovative and expedient two-way Internet service that required no connection to another service provider.

“Internet service has a lot of competitors in the field,” Foote said.

In the third quarter Securities and Exchange Commission filing, the company claimed it needed additional finances and will need to restructure outstanding debts by April 15, when bonds mature.

“One of the challenges is that they had a lot of debt issued early on where the interest on the first couple of years was deferred to a later point,” Foote said. “That was going to be a tough hurdle for them to overcome. Even though they were in the process of trying to roll out the Internet service, we felt the odds were against them because of the combination of the debt and the competition from the satellite dishes.”

Cutbacks for Jackson-based Wireless One were announced Jan. 15, about the same time a committee of creditors representing 41% of company’s senior note holders met to discuss the company’s outstanding debts and equity. The company reached an agreement with the committee to file a reorganization plan under Chapter 11 of the U.S. Bankruptcy Code.

“Implementation of its reorganization through Chapter 11 will help ensure that it will continue to be able to provide uninterrupted service to its subscribers and customers and to continue to pay its employees and vendors throughout the reorganization process,” said Sean Flynn, company spokesperson.

Cutbacks were announced last month for 109 workers, representing a 20% reduction in its workforce. About 30% laid off were temporary workers. Employees currently total about 550, and “only four or five layoffs are expected down the road,” said Flynn.

“The company will shift decision-making ability to 10 regional areas led by managers who will be responsible for the area’s profitability,” said Flynn.

Customers will not be impacted by the layoffs, Flynn said.

“It is not expected to impact any kind of service in a negative way,” he said. “In fact, Wireless One is hoping just the opposite happens. Of 38 marketing offices, 28 will be retained throughout the Southeast. We will bring regional areas into decentralized management and be able to allow different customer areas to make decisions affecting customers in the field. As it is now, decisions have been made out of the Jackson office.”

The customer service base consists of single family homes, multiple dwelling units and Internet data users.

Ken Anderson, director of residence life and student housing at Hinds Community College, said about 600 connections are serviced through Wireless One on the Raymond campus.

“Everything has been running smoothly,” Anderson said. “It’s been business as usual. They’ve always been real prompt with taking care of service calls.”

Henry Burkhalter, president and CEO of Wireless One said he is “very pleased” bondholders formed a committee to begin negotiations toward financial restructuring.

“Our objective is to implement our financial restructuring with minimal impact on our operations,” Burkhalter said. “We believe that implementing our restructuring through a ‘prenegotiated’ Chapter 11 would be a prudent step that would allow us to continue normal operations while we reorganize to become a stronger, more viable company.”

Wireless One, the largest provider of wireless cable TV services in the Southeast, owns, develops and operates wireless video, data and voice over Internet protocol systems in 11 states. About 700,000 businesses and 7.7 million households are located in Wireless One’s 67 markets.

About Lynne W. Jeter

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