Alvarion Pays $56M for Mobility

By Jim Wagner

July 28, 2004

The fixed wireless equipment maker dips its feet in mobility and plans to use its purchase of Interwave to spur WiMAX development.

Officials at Alvarion, a Tel Aviv-based broadband wireless manufacturer, announced its decision to acquire 3G equipment maker Interwave for $56 million Wednesday.

The all-cash merger, in which Interwave will become a wholly-owned subsidiary, is subject to shareholder approval. According to Carlton O'Neal, Alvarion vice president of marketing, shareholders will meet sometime next month, and he expects the deal to close by the end of the third quarter of 2004.

Erwin Leichtle, Interwave CEO, will become Alvarion's mobility chief when the acquisition is complete.

The acquisition adds a new area of growth for Alvarion, known for its license and license-free spectrum equipment for enterprise networks, ISPs and telecoms.

Interwave manufactures the infrastructure equipment used by wireless phone carriers to deliver 3G phone services under its flagship product Network-In-A-Box, which is a mobile switching center, base station controller and base transceiver station.

The company's products take advantage of the two dominant wireless standards -- CDMA and GSM -- though Interwave's CDMA product line is still developing a year after signing an all-encompassing licensing agreement with Qualcomm, owner of the CDMA technology.

The company's product lineup of GSM, used by more than half of the 3G networks in the world, and CDMA, used primarily in the United States, made it an attractive acquisition for Alvarion, which sells its equipment to 130 countries.

According to O'Neal, Interwave has been experiencing better growth, percentage-wise, than Alvarion, which makes it even more attractive, as does the expertise the company brings.

Providing 3G equipment is only part of the strategy behind Wednesday's announcement. Interwave's assimilation is part of Alvarion's goal to boost WiMAX, a technology that's more hype than substance at the moment.

WiMAX is the next generation of broadband wireless access (BWA), officially called 802.16 and sometimes referred to as "Wi-Fi" on steroids. It is potentially capable of delivering T-1 data transfer rates as far as 30 miles away and connecting 802.11x hotspots into one encompassing metropolitan area network.

3G wireless phone mobility will play an important part in WiMAX's development and deployment in coming years, O'Neal said, and Alvarion wants to be at the forefront of development when that time comes.

"The strategy of the company is to lead the entire industry with full-scale interoperability with WiMAX, and one element of that is to be mobile," he said.

The development of WiMAX is similar to the cellular telephone spread of the 1980s and 1990s, when small carriers slowly morphed into nationwide providers. At a Wireless Communications Association meeting last month, one cell phone company executive said the BWA movement is at the cell phone's 1985 stage of deployment and predicts mass market adoption as far as a decade away.

Zvi Slonimsky, Alvarion CEO, said in a statement that the merger with Interwave will accelerate their efforts in 802.16 growth.

"We are well-positioned to continue leading this last-mile revolution as WiMAX moves from fixed-only solutions to include both fixed and mobile capabilities."

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