Primus acquires wireless Internet access provider

Primus Telecommunications Canada Inc. announced on Monday that it has acquired MIPPS – a wireless Internet service provider (ISP) – for an undisclosed amount of money to expand its wireless Internet offering throughout the greater Toronto area (GTA).

Primus Canada – a wholly-owned subsidiary of McLean, Va.-based Primus Telecommunications Group Inc. – said the purchase of Markham, Ont.-based MIPPS was a strategic move. The firm plans to add MIPPS’ wireless network coverage in the GTA as well as provide high bandwidth and private data network services to Primus Canada’s existing network, the company said.

Ian Angus, president of Ajax, Ont.-based Angus Telemanagement Group, said that although Primus is nowhere near the size of Allstream Inc. or Sprint Canada Inc., the company is doing well going after high-end residential customers and small businesses.

“You are not going to see Primus bidding to get the Royal Bank’s business, but they do okay. If you were going to make a list of the top telecom providers in the market they are in, they would probably be in the top five or six,” Angus added.

He said MIPPS – an ISP that offers services in the unlicensed band – has followed a fairly conservative expansion strategy that goes against the ‘build it and they will come’ philosophy. Rather than building a network and hoping to find customers, MIPPS has tended to wait until it has secured a customer and then extended its wireless facilities into that area, Angus explained. However, because MIPPS is a private company, Angus said it is difficult to say for sure how the company is doing financially, but added “any private company that has managed to survive through the past six years is doing something right in this business.”

Unlicensed wireless is an important area to be in for a smaller company, Angus said, adding that it gives companies the ability to reach customers quickly without having to pay the phone company or somebody else for use of their fibre or their copper.

“Acquiring MIPPS means [Primus] acquires not only some customers but more importantly a bunch of expertise that MIPPS had in that [unlicensed wireless] area, so I think it’s positive for them.”

Although Angus said this acquisition will help Primus give its customers a one-stop-shop for their various voice and data needs, he warned that the competition in the fixed wireless market – from companies including TeraGo and the recent partnership between Allstream and Microcell – “is competitive and is going to get more competitive.”

“There was a lot of activity in fixed wireless in the nineties and a lot of people tried it and dropped out of it finding that the economics were pretty tricky,” Angus said. “Well, the technology has been getting a lot better and cheaper, so I think you are going to see a lot of people moving into this market.”

The key to succeeding in this market is that the competitors have to have their own access technology so they are not dependent on renting copper from the likes of incumbent carriers like Bell Canada, he added.

“Local service prices are pretty low in this country and if you have got to rent your facility from your main competitor, I think you are going to be in difficulty no matter what. There is just not a lot of margin there,” Angus noted. “I think this is an important move for Primus, it’s not going to change the world, MIPPS is a small company, but it does give them some important expertise.”

Ted Chislett, president and chief operating officer (COO) of Primus Canada said that although Primus is focussing on the GTA with this acquisition, it may be looking to branch out.

With digital subscriber line (DSL), a user has to be close to the Bell Canada central office in order to have access, Chislett said, so there are lots of pockets where businesses or residential customers don’t have DSL coverage. These are the areas that Primus hopes to expand into and target wirelessly.

“We are also looking at strategically where else across Canada we should expand this service offering. So we don’t have any definite plans today, but we are definitely looking into that,” Chislett added.

Primus has placed other companies in its shopping bag over the past couple of years including ISPs Passport Online Inc. in August 2002 and Windsor Information Network Company Ltd. (WINCOM) in November 2002.

In other wireless news announced Monday, Samsung Telecommunications America and Toronto-based Rogers AT&T Wireless announced an agreement to make Samsung’s wireless phones available to Rogers AT&T Wireless customers. According to Rogers, Samsung’s SGH-s307 is the first Samsung phone available to its wireless customers and it will operate exclusively on the Rogers AT&T Wireless GSM/GPRS dualband 850/1900 MHz network in Canada.

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