Look Communications Inc. plans to wind down operations by August and sell its wireless spectrum to the Inukshuk partnership run by Rogers Communications Inc. and Bell Canada.
Rogers plans to have the frequencies converted for fourth-generation wireless services.
“We are planning to have it converted to mobile spectrum,” said Jan Innes, Rogers Communication’s vice-president for communications. She could not say when it would be converted because it is “up to Industry Canada to convert the spectrum.”
Look, based in Milton, Ont. which provides Internet and television using Multipoint Distribution System (MDS) technology, is controlled by Unique Broadband Systems (UBS) Inc., which owns 51.8 per cent of Look’s shares.
Rogers plans to use Long Term Evolution (LTE), widely seen as a rival to WiMAX, for its fourth-generation services. The Look frequencies, which are in the range of 2,596 to 2,686 MHz and 2689 to 2690 MHz, are used for WiMAX trials and will be taken over by the Inukshuk Wireless Partnership, of which Rogers and Bell own 50 per cent each.
The spectrum sale to established national carriers does not bode well for anyone hoping for widespread availability of Wireless Interoperability for Microwave Access in Canada (WiMAX), said Iain Grant, managing director of the Montreal-based SeaBoard Group.
“Rogers already has its (high-speed packet access wireless) network, which is a direct competitor to WiMAX,” Grant said. “Bell with its partner Telus is overbuilding an HSPA network as well, which is directly competitive to the WiMAX investment.”
Grant was referring to the deal announced last year in which Telus and Bell will overlay their CDMA network with HSPA technology.
A spokeswoman for Bell Canada, Julie Smithers, said the spectrum “will support Inukshuk’s long-term wireless broadband strategy.” Bell is not elaborating because it does not want to reveal plans to competitors. Inukshuk currently uses both Bell and Rogers’ wireless networks to provide broadband service in isolated and sparsely populated areas, including First Nations reserves.
Gerald McGoey, Look’s chief executive officer and major shareholder, was not available at press time.
Look announced Tuesday the sale, which is subject to approval by both the Ontario Superior Court of Justice and federal regulators, is worth a total of $80 million. Look said it will “wind down operations over the course of the next 90 days.” In the meantime, Look plans to pay Inukshuk all revenues it collects on the digital subscriber line (DSL) Internet service it resells from Bell Canada. That is part of a deal which will end litigation started in April, 2007, when Bell notified Look it would terminate its service.
The deal announced Tuesday will require Look to pay Bell $16 million.
The first $20 million from Inukshuk is due to Look when the court approves the sale. The next $30 million is due Dec. 31 and the final installment is due either three years after the close of the sale or upon regulatory approval, whichever comes first.
If any payment deadlines are missed, the deal is off and Inukshuk won’t get the spectrum.
Inukshuk was formed in 1999 when Look joined forced with Internet Direct Ltd. And Microcell Telecommunication Inc. to work on providing 4 Mbps service using MCS.
Microcell, which operated the Fido mobile phone brand, was later acquired by Rogers. In 2005, Inukshuk Wireless became a partnership between Bell Canada and Rogers with each company owning half.
Look started out during the dot-com boom using its fixed and mobile licenses to sell television and Internet service. In September, 2001, the company entered bankruptcy protection under the Companies Creditors Arrangement Act, which resulted in a plan of arrangement under which new equity was issued to debt holders and the company started targeting the SMB market. It lost $103 million during the third quarter of that year.
UBS acquired its portion of Look in August, 2002.
In November of 2008, Look began limited trials of WiMAX, using a van to travel around Milton, Ontario demonstrating mobile TV, Internet and voice over IP. At the time, McGoey had said he believed “mobile broadband” would replace “mobile voice.”
But in January a majority of Look shareholders voted in favour of selling the company’s assets, asking for bids no later than Feb. 16. The company lost more than $7 million during the year ending Aug. 31, 2008. Revenues for the year were $20 million, down from $24 million for the year ending Aug. 31, 2007. The court approved the auction of its assets in January.
“It’s great news for Look because they’ve been trying to flog that spectrum for some time,” said Grant, adding it’s not so great for WiMAX in Canada.
“The two carriers who have purchased the spectrum have managed to do the square root of bugger all … since they purchased the Microcell share of Inukshuk,” he said. “We look south of the border and we see Clearwire pushing ahead with WiMAX deployment and we look in Canada where we actually had a three or four or five year head start and we got nothing.”
Clearwire offers service in Baltimore and Portland, Ore. at speeds of 2 to 4 Mbps.
Primus Telecommunications offers WiMAX service in Canada, but on a limited trial basis in Hamilton and Toronto.
“Primus really hasn’t got the muscle necessary to put actually put together either a regional or national deployment,” Grant said.