Start-Up Plans U.S. Network for Free Wireless Broadband
By Matt Marshall, San Jose Mercury News, Calif.
May 23–A Menlo Park start-up, M2Z Networks, plans to raise up to $400 million to build and operate a wireless broadband network aimed at eventually providing free access to most Americans, according to a filing with the Federal Communications Commission.
The company, backed by $10 million from three prominent Silicon Valley venture capital firms, would offer basic 512 kilobits per second service to households for free, supported by advertising. But it would charge for premium services, such as faster broadband connections. And it would give 5 percent of gross revenue back to the U.S Treasury.
The speed of the free service would be about six times faster than dial-up Internet connections serving about 50 million Americans. It would be on the low end of DSL service and substantially slower than most cable modem connections.
M2Z says it can build the network and offer access to 95 percent of the U.S. population in 10 years.
The company says the service will help reach more than 118 million people who don’t have broadband and help make them more productive. “The potential economic benefits from increased broadband penetration facilitated by M2Z’s proposal are very large,” the company said in its filing.
The hitch, though, is whether the FCC will agree to M2Z’s request for access to the 20 MHz of spectrum between 2,155 MHz and 2,175 MHz — which is relatively unused — for free and for 15 years.
It says the band is also ideal for using a new blend of three technologies that will help make the service faster and cheaper: time division duplexing, advanced antenna systems and orthogonal frequency division multiple access.
Usually, parts of a wireless spectrum are auctioned by the FCC, and M2Z is asking the FCC to let it bypass that process. Such grants have been made in the past, for example to Sprint Nextel last year, but under very different conditions. The grant of airwave spectrum was made as part of a swap, in which Sprint Nextel had to return other valuable spectrum in exchange, as well as perform other services.
M2Z had remained secretive until its May 5 filing.
It is the latest ambitious start-up launched by Milo Medin, founder of the broadband company @Home, which started in 1995 and offered broadband to 4 million homes before flaming out after the Internet bubble burst in 2000.
He is co-founder and chief technology officer of M2Z. The other co-founder is John Muleta, who is chief executive. He is a former FCC official who was once in charge of consumer wireless services policy.
M2Z has backing from respected Silicon Valley venture firm Kleiner Perkins Caufield & Byers, along with Redpoint Ventures and Charles River Ventures. Kleiner’s John Doerr, Redpoint’s Geoff Yang and CRV’s Bruce Sachs sit on the board. It was incubated last year in the offices of Charles River and currently lists its address at the firm’s offices.
The plan is risky, however, because there are numerous competitors and because 10 years for building the network is a long time in an industry where costs that can be charged to users are declining rapidly.
Indeed, Verizon, AT&T and even Google are building high-speed wireless networks. And in just the latest example that others are thinking along similar lines, Clearwire, a company founded by Craig McCaw, is buying spectrum across the nation. Last month, it filed to raise roughly $400 million in an initial public offering, and it has been bleeding red ink so far.
Contact Matt Marshall at (408) 920-5920 or via his blog at www.SiliconBeat.com
—–
Copyright (c) 2006, San Jose Mercury News, Calif.
Distributed by Knight Ridder/Tribune Business News.
For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.
NYSE:S, Unknown:KPC, Unknown:RPV, NYSE:VZ, NYSE:T, NASDAQ-NMS:GOOG, Unknown:CWIRE,