Open Range Selects Alvarion® for Largest RUS-funded, Rural Broadband 
4G Mobile WiMAX Network Deployment Across 17 States Valued at $100 Million

Open Range Communications announced last week that it has selected Alvarion to provide radio access equipment, customer devices (CPE) and systems integration services over the next five years for the largest Rural Utilities Service (RUS) funded broadband wireless deployment spanning 17 states, 546 rural communities, and reaching up to 6 million people. In addition to selecting Alvarion WiMAX Forum® Certified™ 802.16e BreezeMax WiMAX base stations, Open Range will rely on Alvarion’s global experience for the end-to-end integration of its 4G network solution for rural America. Alvarion is not well known for its network integration services in the US, and may need to rely on third party support for the Open Range contract which is expected to be worth more than US$100 million to Alvarion over a five-year implementation period.

Alvarion offers OPEN WiMAX solutions for a wide range of frequency bands supporting a variety of business cases.  While many of its larger competitors are now refocusing their 4G efforts on LTE, Alvarion is the largest pure-play WiMAX vendor, with overall cumulative WiMAX shipments of more than $500 million and the most extensive WiMAX customer base with over 250 commercial deployments around the globe.  Alvarion was the first WiMAX equipment supplier to receive USDA acceptance as well as “Buy American” status from the USDA RUS for two of its BreezeMAX base stations in July 2008. Both RUS and “Buy American” designations are required for operators requesting federal funds from the Rural Broadband Access Loan program for the purpose of purchasing and deploying broadband systems. This is the second major contract funded by the US Department of Agriculture’s Rural Utilities Service (RUS). At CTIA Wireless, Alvarion announced a similar rural deployment in southern Georgia and northern Florida with Main Street Broadband, which has secured $34 million in RUS loan funding.  However, Open Range’s project may be ten-times larger and both projects could potentially grow if the operators secure additional broadband stimulus funding later this year.

Open Range Communications has developed several innovative methods for deploying a WiMAX-based broadband network serving the most remote rural communities in the US. Rather than purchasing its own spectrum, Open Range has signed a 30 year agreement to lease mobile satellite spectrum from Globalstar, allowing it to deploy wireless broadband service in rural communities using the Ancillary Terrestrial Component (ATC) authority granted by the Federal Communications Commission in October 2008. The agreement contemplates using up to 19.275 MHz of Globalstar’s ATC spectrum in the 2.4 GHz to 2.5 GHz range to offer dual mode wireless broadband services to more than 500 communities that do not have adequate access to terrestrial-based broadband voice, data and Internet services. Customers outside of the WiMAX coverage area will be able to use Globalstar service over the satellites. Using the build out schedule provided in its RUS funding application, the fixed and variable payments to be made to Globalstar over the 30 year term indicate a present value of between 30 and 40 cents per MHz/Pop.  Open Range is also working with Level 3 Communications to access its fiber optic network for high-capacity transport and backhaul links.

Although Alvarion will be deploying its standard BreezeMax IEEE 802.16e base stations and CPE for the Open Range deployment, it will have to address the unique characteristics of the ATC frequency spectrum which is adjacent to the 2.5 GHz band where Clearwire and other US operators are deploying mobile WiMAX networks.   Alvarion must program special filters into their base station and customer premise equipment to avoid interference with the unlicensed 2.4 GHz bands used for unlicensed WiFi.  As for the satellite component, chips may be available sooner rather than later to support devices moving in between the WiMax and orbital networks. Qualcomm recently announced an initiative to create dual-mode satellite-cellular chipsets for devices and may place dual-mode satellite-WiMAX chips on its roadmap. While devices might not be supported off the shelf, any software adjustments will be minimal, and ultimately chip makers may embed the software directly into their platforms.

Open Range is funded by an investment of $100 million from One Equity Partners (OEP), the private equity arm of JPMorgan Chase & Co., and a $267 million Broadband Access Loan from the United States Department of Agriculture’s Rural Development Utilities Program (RDUP).  The OEP investment satisfies the private financing prerequisite loan terms, making the rural broadband funds available to Open Range.   Established in 2001, One Equity Partners manages $8 billion of investments and commitments for JPMorgan Chase & Co. in direct private equity transactions. Partnering with management, One Equity Partners invests in transactions that initiate strategic and operational changes in businesses to create long-term value. One Equity Partners has invested approximately $3.5 billion in recent years to acquire over thirty companies in a variety of industries including defense, chemicals, healthcare, technology and manufacturing.

The Open Range network will be built with an all-IP architecture leveraging the latest 4G technology to give millions of rural Americans the ability to enjoy wireless broadband services across the communities where they live and work.  Open Range plans to deploy a best-of-breed network infrastructure in more than 500 rural communities which cover over 6 million people, and to initiate state-of-the-art 4G services customers across rural America beginning in the fourth quarter of 2009.  In most communities network equipment will be located on existing towers.  The business plan calls for coverage to be deployed in un-served and underserved rural communities with average populations of approximately 10,000 people.  To date, Open Range has not announced any plans to pursue additional stimulus funding or to form public-private partnerships around this rural broadband deployment.

Open Range’s Simply EasierSM wireless communications services require no home installation, no awkward and unsightly rooftop antennae, no technicians and simple plug-in hardware setup to initiate service. Customers simply connect an Open Range Simply Easier device to a desktop or laptop computer for instant, portable, dependable and low-cost access to the Internet. Open Range will offer to subscribers that will enable not only a hyper-connected Internet lifestyle, but also new economic opportunities not possible before because of the lack of infrastructure.
Some of the unique attributes available through this “always on” wireless broadband network include:

• Simple and instant service activation
• Voice and data capabilities
• WiFi for connectivity to existing PCs
• Highly secure network communication

Open Range’s ambitious plan for rural connectivity has the potential to stimulate local economic development for many rural communities across the US. Within its WiMAX footprint, Open Range plans to deliver portable and eventually mobile voice and data services to its business, consumer and institutional customers. Open Range is the only broadband wireless access provider planning to offer both terrestrial and satellite-based high speed Internet access to reach deeply into un-served and underserved rural American communities.  This differentiation could also limit the ecosystem of CPE suppliers and impose a premium on both the subscriber equipment and monthly service fees.  Open Range’s hybrid WiMAX and satellite broadband service could also support a variety of innovative public safety and commercial applications, including municipal traffic control, digital signage, remote monitoring and automatic meter reading.  In the end, the success of the Open Range wireless broadband network will judged based on its ability to stimulate economic growth, enhance education, improve the quality of life, connect customers and improve public safety in America‘s rural communities while remaining competitive in the mobile Internet age.