Craigs bet company on mobile WiMax

For years the Craig name mainly meant television and radio in Western Canada through the family’s Craig Media holdings, and a small wireless unit offering digital cable TV and Internet service in Winnipeg and Vancouver.

However, brothers Drew and Boyd are about to revitalize the name by turning Craig Wireless Systems into what they hope will be a major mobile WiMax service provider.

Last month the company moved onto the Toronto Stock Exchange through a $160-million reverse takeover of a shell company. The goal, CEO Boyd Craig said in an interview, is to raise some $35 million to build new networks in areas the company holds spectrum, including Manitoba, southern B.C., Palm Springs, Calif., and Greece, and expand into new areas. Mobile WiMax will be self-provisioning, Craig said, a boon for providers.

“It’s really going to revolutionize the telecom business,” he declared.

In some ways it’s as much a gamble as Craig Media wagered when it tried to expand into the Toronto television market and had to surrender. Craig Wireless, which started in 1995, will spend almost the next 12 months building the WiMax networks and adding equipment to its existing towers, which could cost an estimated $200,000 a cell site, he said. That would mean for Winnipeg alone an expense of $5 milltion to $8 million.

In the later half of the year it hopes to start selling high-speed Internet and VoIP services to residential customers.

But Craig believes the expense will be worth it. By the middle of next year, he said, Intel-powered laptops with Intel chips will begin appearing with mobile WiMax connectivity, followed soon by WiMax-enabled cell phones and other mobile devices.

“I imagine everyone is going to want a mobile broadband connection, whether they’re going to want it for their personal or business communications needs,” he said.

Ron Gruia, a telecom analyst at Frost & Sullivan, noted Craig will have an opportunity at least in Manitoba because its mobile wireless products won’t compete with those offered starting this spring by Bell Canada (Sympatico High Speed Unplugged) and Rogers Communications (Portable Internet). Those two companies aren’t licensed for Manitoba or Saskatchewan.

But in areas where they will compete, such as southern B.C., Craig could be seen as an alternative to the major providers, Gruia said. On the other hand, Bell and Rogers will have had an almost one-year head start. “I’m reasonably confident WiMax will continue to expand into new niches, said Gruia. “That said, there are still hurdles like spectrum allocation, certification, interoperability and standardization. But I’m reasonably confident this is going to work out.”

Craig wouldn’t say exactly what products he’ll be offering or how they’ll be priced.

Meanwhile, as the new WiMax network is being built, Craig Wireless will have little revenue. It has shed fixed WiMax licences in Honolulu and New Zealand, its fixed WiMax service in Athens has been sold to a CLEC and its wireless video service here is being sold to a Canadian satellite company, “

Our real revenue growth is going to start next year once our networks are built,” Boyd Craig said.