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Wireless One focused on Internet service, e-commerce

Thanks in part to a $36-million commitment that will help Wireless One emerge from bankruptcy, the Jackson-based company can concentrate on marketing Warp One, its wireless Internet services and e-commerce Web sites.

“Sales are going very well,” said Walt Eilers, vice president of public relations. “We expanded our markets to include Baton Rouge and Memphis and are deciding where to expand next.”

On May 18, Wireless One announced it had obtained a $36-million commitment letter from Cerberus Capital Management that will help Wireless One finance its expansion into the high-speed Internet market. About $20.5 million will be used to pay outstanding debt and to help finance the build-out of its high-speed data network.

New services and products include the creation of a network operation center (NOC), a network management software package, firewall service, filtering services, bundled packages for customers, consulting services and the introduction of a wholesale broadband wireless access (BWA) product.

“Carrie Tyer has been hired to operate our NOC,” Eilers said. “We have on-line support daily from 7 a.m. to 9 p.m. for network response, with a tech on call 24 hours a day. Through our NOC, we can do everything from Web hosting, design, maintenance and e-mail.”

In April, Wireless One announced completion of a six-month test of voice over Internet protocol (VoIP), using the company’s licensed, two-way BWA technology.

“Using our BWA technology, we can deliver VoIP that features digital voice and fax communications to local and distant businesses across the Internet, private IP networks or public switched telephone networks,” said Henry Burkhalter, chief executive officer.

On July 6, a hearing is scheduled with the bankruptcy court for review of proposed plans, Eilers said.

“The new financing is a key part of the company’s strategy to restructure its balance sheet and exit bankruptcy a stronger, more viable company,” said Burkhalter.

MCI WorldCom announced it might provide similar financing on more favorable terms, provided that MCI WorldCom has the right to approve any changes in Wireless One’s proposed reorganization plan.

MCI WorldCom owns two-thirds of Wireless One’s bonds, which are currently trading at a steep discount to par value because of the concerns over bankruptcy, and can be converted to more than 90% of Wireless One’s stock. MCI WorldCom may have to provide Wireless One equity holders anywhere between $3 and $8 per share after a revised restructuring.

“We’re coming out of Chapter 11 and things are moving along in a positive manner,” Eilers said.

Heartland Wireless, the largest U.S. wireless cable operator, which owns 20% of Wireless One, entered Chapter 11 bankruptcy last fall. It emerged April 1 as Nucentrix Broadband Networks with a business plan similar to Wireless One’s.

On June 10, Wireless One announced a partnership with Netgateway to create an electronic mall and offer e-commerce as part of a bundled package to businesses at www.wirelessonemall.com.

“You can pay for items from different vendors with a single transaction, which makes it easier than going to the mall in town,” Eilers said.

The e-mall is already open for Internet sales to its 104,000 subscribers in 38 markets.

“This is the first marriage of e-commerce and two-way broadband wireless access service,” said Ernest D. Yates Jr., chief operating officer.

Wireless One officials have been hoping Warp One, introduced to the Jackson area last April, would sell at warp speed. Company president Henry Burkhalter originated the innovative and expedient two-way Internet service that requires no connection to another service provider, Eilers said.

Compared to other bandwidths available from various Internet service providers, Warp One can download a five-megabyte file in five seconds, compared to 33 seconds on a T-1, 13 minutes on an ISDN and 25 minutes on a 33.6 KBPS.

A host transmitter provides the wireless high-speed signal to a three-foot antenna at the user’s locale. The signal is received and passed via coaxial cable to the computer system. Downstream information is transmitted through a compressed, encoded, wireless frequency spectrum, Eilers said.

“To make Warp One work, we acquired two additional spectrums — one above and one below normal spectrum use for upstream and downstream links,” Eilers said. “Wireless One bought a licensed spectrum that eliminates interference. If there’s interference, the FCC will take care of it. The way the system was engineered, we have three back-up systems.”

At the time of the product launch, installation prices were tentatively set at $1,200 to $3,000 with monthly rates ranging from $405 to $1,575, depending on features. According to their Web site, installation prices are $500 to $1,500 with monthly rates ranging from $150 to $890.

“The Web site has just been updated and those are the most current rates,” Eilers said, in a phone interview last week.

Two direct sales representatives service each of the three Warp One markets. The Warp One access area in Jackson covers a 35-mile radius from the broadcast tower at Channel 40, located at Mississippi 18 and Maddox Road in Jackson.

Due to financial difficulties, Wireless One reached an agreement earlier this year with a committee of creditors representing 41% of the company’s senior note holders to file a reorganization plan under Chapter 11 of the U.S. Bankruptcy Code in Delaware. In January, executives announced that more than 100 workers — 20% of its workforce — would be laid off and 10 of 38 marketing offices would close.

In the first quarter of this year, Wireless One’s revenue totaled $9.3 million, EBITDA was a negative $1.8 million and the company reported a net loss of $20 million. In the same time period last year, Wireless One’s revenue was $10.6 million, EBITDA was a negative $1.6 million and the company reported a net loss of $19.3 million.

In a report filed with the Securities and Exchange Commission for the quarter ending March 31, Wireless One “does not anticipate being able to generate net income for the foreseeable future and there can be no assurance that other factors…will not result in further delays in operating on a profitable basis. Net losses are expected to continue as the Company focuses its resources on the marketing of its DTV products…and development of its Internet access product.”

Jackson-based 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.

Contact MBJ contributing writer Lynne Wilbanks Jeter at lwjeter@yahoo.com.

About Lynne W. Jeter

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