THE BUSINESS JOURNAL

THE BUSINESS JOURNAL                                April 27 - May 3, 2001

Wireless provider CTC could be last one standing in KC market

by M. Steele Brown, Staff Writer

Local wireless broadband provider Computers & Tele-Comm is winning the war of attrition.

The Independence-based company has seen its only significant competitor - WorkNet Inc. - leave the market and national wireless heavyweight Winstar Inc. declare bankruptcy. Couple that with CTC's pending merger with competitor / partner KNET, and the Kansas City market, which may be very large considering the promise industry insiders see in the wireless Web is wide open.

CTC is projecting revenues of $750.000 for 2001- $450,000 of that from wireless - and has 65 customers, up from 40 two months ago, but that number should be around 200 by this time next year, said Graeme Gibson, CTC's president and CEO.

When considering the margins made from providing the service - 40 percent to - 50 percent in most cases - business is looking good. Wireless broadband - the high-speed beaming of information by satellite or antenna as opposed to using in-ground fiber - is part of the 3G, or third-generation, technology that many see as the saving alternative to chopping up city streets. Companies beam a high-speed radio signal to receptors connected to computers or phones - without using miles and miles of fiber. The only fiber runs from the antenna atop a structure to the phone or computer itself.

Michael Strobietto, vice president and general manager of Winstar in Kansas City and St. Louis, said Winstar has halted all expansion in the area and will focus on signing up more customers in the buildings in which it already is delivering service.

Although Winstar is not a direct CTC competitor - CTC's high-end customers spend $900 a month for service, compared with Winstar's $750 low-end customers - the New York-based company's bankruptcy filing on April 18 does open up the market. Winstar has about $6.3 billion in debt, has defaulted on about $75 million in interest payments and recently fired 44 percent of its national work force, including a drop in the company's local employees from 20 to 12.

Tim Burke, a telecom analyst for Edward Jones in St. Louis, said the key to making it in the wireless broadband game is to stay away from the "Field of Dreams" theory: If we build it, they will come. Burke said that if a company builds its network out, like Winstar did, thinking that customers will come in droves, it might have dire consequences.

Burke said he recommended a more modest approach, taking the bottom line and customer availability into consideration for all buildouts.

This is good news for CTC, which builds out antennas only when customers order them.

Once the merger with KNET is final, CTC will have 14 full-time workers, Vice President Art Graham said

What makes CTC's technology special is that it can reach more people, with less interference and a clearer signal, Gibson said

Using a series of well-placed antennas, which will increase from the current six to 50 when the network is complete in 2003. CTC will beam a radio signal from its main station to its customers. What makes it different is that CTC's small antennas account for the city's hilly terrain, so there are no "dead spots," he said. The company's antennas are placed on several high spots in the city and eventually will blanket the area.

Most large-scale wireless broadband companies erect a handful of towers and beam customers a very powerful signal, which may not hit low-lying areas. This signal, which can travel as far as 50 or more miles, is part of the regulated spectrum. This is a higher-band-width signal that the US government leases outright to larger companies such as Winstar.

But CTC uses unregulated spectrum, which the Federal Communications Commission has set aside as a sort of free testing ground for new technologies, Gibson said. The unregulated bands are used by mobile and wireless broadband carriers, private corporations for close-in networking, scientific groups and hospitals.

Without the government to regulate use, the issue of overlap is always prevalent. However, with no direct competition, CTC is not challenged now because Winstar uses a different band, Gibson said But even if it was competing for space, CTC's technology would circumvent overlap issues anyway, he said

By using so many antennas, located at high points throughout the hilly bistate area. CTC is able to shorten the distance between antenna and customer. And the closer a client is to an antenna, the better the service and the cheaper it is to get.

"If the customer is only a half-mile away from an antenna, then the service is $99 a month, " Gibson said ''If they're three miles out, it jumps to $249."

Gibson said that when the network has been installed throughout the area, every potential customer will have a good line of sight to a CTC antenna.

REACH M. STEELE BROWN at 816-421-5900