Copyright 2005 Toronto Star Newspapers, Ltd.

The Toronto Star

March 9, 2005 Wednesday

Bell Canada is investing $100 million (U.S.) in a broadband wireless venture founded by U.S. billionaire Craig McCaw, a sign that the country's largest phone company is getting serious about an emerging fixed-wireless standard dubbed Wi-Max.

As minority owner of Kirkland, Wash.-based Clearwire Corp., Bell will become the exclusive provider of Internet-based phone services and other "Internet Protocol" applications over Clearwire's wireless network, which currently provides high-speed Internet access to homes and small businesses in three U.S. states.

Michael Sabia, chief executive of Bell parent BCE Inc., will be given a seat on the board of Clearwire. The company plans expansion this year into more U.S. states and certain European markets, such as Ireland and Belgium. Outside of North America, Bell will be Clearwire's "preferred" provider of voice-over-Internet service.

"This alliance is a good opportunity for Bell Canada to develop our wireless broadband capabilities for our home market and leverage our VoIP expertise," Sabia said in a statement.

Furthering its commitment to broadband wireless, Bell also said it plans to become a shareholder in McCaw's NR Communications, which is in partnership with Rogers Communications Inc. to deploy wireless high-speed Internet access to communities across Canada through an initiative called Inukshuk.

"It seems that Bell is endorsing the Inukshuk idea with more than token support," said Iain Grant, a telecom consultant with the Seaboard Group in Montreal.

NR, Microcell Telecommunications and Allstream Inc. were the original partners in the Inukshuk joint venture established in November 2003.

But consolidation in the market, Manitoba Telecom's purchase of Allstream and Rogers' acquisition of Microcell Inc., left the wireless broadband project in limbo.

Rogers appears committed, but Manitoba Telecom decided in February to pull out, a move considered shortsighted by some analysts.

Bell is stepping in to fill the strategic void and, like its Clearwire contribution, is likely to provide VoIP services for future Inukshuk offerings.

"Frankly, we look forward to that partnership," said Scott Thomson, vice-president of strategy for Bell Canada. "We think it's a win-win for Rogers, Bell ... and consumers."

Thomson would not disclose the value of Bell's investment in NR. Heather Armstrong, a spokesperson for Rogers, said the company had no comment "at this time."

Fixed wireless technologies, such as networks based on the Wi-Max standard, offer an alternative to high-speed digital subscriber line (DSL) or cable service, but with the added benefit of mobility.

A laptop embedded with a Wi-Max chip can wirelessly communicate with a network tower as much as 50 kilometres away, providing the same kind of high-speed Internet access that a local home Wi-Fi network or public hotspot provides but over vastly greater distances.

"We view it as an innovative, promising access technology," said Thomson.

"Bell intends to take leadership in this field. ... That's where the Inukshuk piece comes in."

McCaw, who sold his McCaw Cellular Communications Inc. in 1994 to AT&T Corp. for $11.5 billion (U.S.), is hoping to do with Wi-Max what he did with cellular phones.

He launched Clearwire in June and has since deployed broadband wireless networks in Texas, Florida and Minnesota.

Clearwire is parent to broadband wireless equipment provider NextNet Wireless Inc., another McCaw-backed venture that is a key supplier to the Inukshuk project.

Semiconductor giant Intel Corp. has committed to the Wi-Max standard, and last October made a major investment in Clearwire.

The two companies, along with NextNet, have agreed to co-develop Wi-Max wireless equipment for networks and notebooks computers.

"The combination of Clearwire and Bell, with a prime focus in non-Canadian markets, is a major step for Bell, and one that could pay significant dividends as the Wi-Max ideal gains legs," said Grant.

Rob Mechaley, chief technology officer of Clearwire, said Bell was chosen as a partner because its VoIP product was the most advanced.

"Bell is truly an innovator," said Mechaley, adding that the nature of VoIP makes it possible for Bell to provide and manage the service from Canada.

The service being offered to Clearwire will be the same "hosted" product that Bell provides to its large corporate customers, said Bell's Thomson.

"What this alliance does is leverage this network," he said, adding that no Bell staff will need to move to the United States. "With IP you don't have to have facilities in different regions. That's the beauty of it."