From the Enterprise VoIP Experts

August 19, 2010

Broadband Fixed Wireless Providers Airband, Sparkplug Merge

By Executive Editor, TMC

In an effort to achieve greater scale, Airband Communications and Sparkplug Communications have merged. The deal, for which the financial details were not disclosed, creates the largest fixed wireless company for businesses in the U.S., according to the company – which is headed by the former Sparkplug CEO, but goes by the name Airband.

A move by Sparkplug to combine with another service provider was expected, as indicated in our June 16 TMCnet story titled “Sparkplug CEO Expects Further Consolidation in Fixed Wireless Broadband Space.” In it, Michael Ruley, who had been Sparkplug CEO and is now CEO of the new Airband, talked about how wireless broadband outfits that do business in just a handful of markets are limited in the scope of their offerings to customers, as well as in their financial prospects related to the investment community.

Prior to the merger, which closed yesterday, Sparkplug offered services over its own networks in Des Moines, Iowa; Las Vegas; and Phoenix metropolitan areas. The new Airband, however, provides a suite of voice and data services in 17 markets.

Services run over Airband’s broadband wireless network and include data offers from 1mbps into the gigabit Ethernet speeds as well as VoIP services, including hosted VoIP and SIP trunking. Now Airband can not only deliver its services over a wider swath of markets, but it provides new opportunities to sell to larger business customers with offices in multiple Airband markets.

When TMCnet initially spoke with Ruley this June in Sparkplug’s Scottsdale, Ariz., office, he said that company was a late stage VC-backed company with less than $20 million in annual revenue. The newly enlarged Airband has annual revenue in the sub-$50 million range.

Neither company was net income profitable prior to the merger, and the new Airband won’t be profitable for a little while, Ruley told TMCnet yesterday. But he said the company will be operating profitable “very quickly,” meaning this year.

Helping the new Airband hit that and other goals is $20 million in financing that it received as part of yesterday’s transaction. Previous equity backers Ignition Partners, Key Venture Partners, M/C Venture Partners and Trilogy Equity Partners are leading the $11 million equity investment. In addition, Airband got $9 million in debt financing from Silicon Valley Bank and MMV Financial.

The new financing will be used to fund growth and acquisitions. Ruley declined to provide details on whether or when Airband might be involved in addition M&A activities, but he indicated the company is open to opportunities on this front.

In addition to Ruley, who will be moving to Dallas, where Airband is headquartered, company leadership includes Tim Kinnear. Formerly CEO of Airband, Kinnear now occupies the CFO post. Other key folks at the company are Jeff Owens, chief technology officer; Jim DaBramo, executive vice president of sales; Jennifer Mao, vice president of marketing; and Daman Wood, vice president of wholesale markets.

The combined company operates in the following markets: Atlanta; Austin; Baltimore; Dallas; Des Moines; Fort Lauderdale; Fort Worth; Houston; Las Vegas; Los Angeles; Miami; Orange County, Calif; Philadelphia; Phoenix; San Antonio, San Diego and Washington, D.C. The only one of those markets in which the former companies had overlap was Phoenix.

Both Sparkplug and Airband networks use the BroadSoft platform to deliver hosted VoIP services. For access, the Sparkplug network today employs Alvarion and Motorola Canopy gear.

 “We’ll be looking to migrate to one technology over time,” Ruley told TMCnet. “It’s really important that we deliver our VoIP services over our own wireless network; the Alvarion equipment gives us quality of service to do that.

“Alvarion is the current vendor within Airband and most likely will be the vendor that we migrate to over time within the Sparkplug network,” he added.

Fixed wireless broadband offers businesses some nice benefits, including access to areas not reached by fiber, fast turn-up times, and connectivity that’s diverse from wireline, Ruley noted during the interview with TMCnet earlier this summer.

“The key for us is owning the last mile,” said Ruley at the time, noting that many CLECs can’t make that claim. “Not many companies own [their] own independent network. I don’t touch other competitors’ networks, nor do I need to rely on a competitor to offer service to my customer. [That] means that I can control my customer relationship. I can make sure that it’s provisioned correctly. I can make sure the quality of service is there. I can make sure the bandwidth we commit is delivered. And I can monitor it myself.”

Edited by Patrick Barnard