BACK IN THE LATE 1990s, when his brother Drew Craig was still running Craig Media, whose primary assets back then were the A Channels, Boyd Craig was busy launching what was hoped then to be a “cable killer”.
In its heyday, Sky Cable delivered digital television wirelessly to thousands of homes in Manitoba in the hopes of taking a big chunk of the TV distribution market. Alas, as with other “wireless cable” startups in North America, technical limitations plus the power of the incumbents and growing satellite companies, led to their limited growth and for some, demise.
But Craig Wireless has persevered. Okay, it’s winding down its TV distribution business in Manitoba by sending customers to one of the DTH companies, but it is banking on WiMax and has been investing in certain spots around the world, acquiring licenses with an eye on future riches delivering mobile broadband speeds wirelessly to the likes of Greece and Palm Springs, not to mention its Canadian licensed areas of Manitoba and British Columbia.
Craig Wireless recently began trading on the Toronto Stock Exchange and is on the prowl for acquisitions and additional growth. Recently, CEO Craig chatted with Cartt.ca editor and publisher Greg O’Brien to discuss his wireless company’s future plans. What follows is an edited transcript.
Greg O’Brien: What have you been up you? What’s been going on before and since your big announcement?
Boyd Craig: I don’t know where to start. Do you know any of the background to Craig Wireless?
GOB: Well, I do, but give me the whole spiel so we can remind the readers.
BC: Sure. We really started in this wireless business in 1995 when we were granted a license in Manitoba. In fact it was the first MDS license ever issued by Industry Canada.
GOB: Then you were Skyweb weren’t you?
BC: Sky Cable… and at that point in time the technology it was used for delivery of TV signals and it was one way, and we built an extensive (system) throughout the southern portion of Manitoba, including the city of Winnipeg and in ’96 it went on the air. Then, in about 1999, the technology became two-way.
That meant we could use it to deliver high speed Internet, so we grew the Manitoba system and at one time we had 10,000 TV customers… and about 1,200 high speed wireless customers.
But then we kind of just left it there because the technology was changing so fast — that we stopped. Then July, 2000, we were awarded the same license for most of the province of British Columbia. I think it covers about 80% of the population of the province of B.C.
Then we did some other stuff internationally. We bought a system in Honolulu from Verizon. And we bought one in Palm Springs, California which we still own today. We also bought some spectrum in New Zealand.
GOB: You still own the Honolulu or New Zealand?
BC: No, we sold that… We’ve also bought some spectrum in Greece. And it’s in the 3.5 GHz band, but the license covers the whole country of Greece.
GOB: Why Greece?
BC: Well, a number of reasons. Number one, people that owned the license wanted to sell it. It’s a very roundabout story. But, we caught wind it was for sale and in fact at one point, we were talking about merging with them. But, during the process of those discussions, they decided they were going to sell it, so, we bought it.
I think it’s a great opportunity because the country of Greece is 11.5 million people and the license covers the entire country, including the city of Athens, which is a big city. There’s a lot of people in a relatively small area.
GOB: Now, are you providing service there or do you just have the license so far?
BC: We have the license, but in order to stay in compliance, we had to initiate service there. So, we started with—I don’t know what you know about WiMax.
GOB: Sure, I know what WiMax is.
BC: So, the bands that we have – 2.5 and the 3.5 bands – are the initial bands that are going to be used for WiMax. So, all the equipment that’s just becoming available now for mobile WiMax is actually designed for the bands we have.
So, we knew what was happening with WiMax and that’s why we were very interested to acquire more licenses. And Greece is an interesting opportunity because of its population, and they’ve joined the EU as you probably know. The economy there is growing, the country is modernizing. Although it’s a modern place it’s just catching up to the rest of the EU. And there’s a very low broadband penetration. It’s less than 10%.
GOB: So, are you delivering just broadband service there?
BC: We’ve started to. We have about seven base stations up and running.
GOB: How many customers would that be?
BC: We’ve signed a wholesale agreement with CLEC. So, they’re actually putting customers on our network and paying us a wholesale rate regardless of how many customers we have. So, we do have revenue coming into our operations in Greece. In fact, the business is cash flow positive. So, it’s been interesting. And then with (the next generation WiMax) equipment now becoming available, that’s when we’re really going to start building onto these networks… between now and the new year. That’s really when you can take delivery of it.
GOB: And what will that equipment enable you to do?
BC: It’ll be exactly like a cellular phone network, only instead of a narrow band connection, it’s a broadband connection. So, it can do everything that a cellular network can do and more. So, the concept is that WiMax operators will deliver broadband connections to mobile devices, either in your home, in your car, or wherever you go, the concept is we can connect every person and every thing within our coverage area with the high speed connection to the Internet.
GOB: So when do we see mass production of all of these devices that you can get the consumers in and how will you get them to consumers?
BC: 2008 is really seen as the year that the network operators are going to build the network. And the later part of 2008 and 2009 is when the CPE or customer premise equipment, handsets, etc. are going to be produced en masse. And you know you have the likes of Nokia, Motorola, Samsung, a whole bunch of big telecom equipment manufacturers are all going to be producing WiMax equipment.
GOB: So, taking it back to Canada, what do you plan to offer in Canada?
BC: Mobile high speed internet connections. Then, once you have a mobile connection as broadband, to us it’s like it’s one pipe. And then the consumer can decide at that point what services they’re going to take off of our network and things like mobile VOIP, video conferencing… Anything you can do with a broadband connection is going to be available to the consumer. But, the difference is that it’s going to be self-provisioning and it’s going to work in the mobile environment. So, it’ll work in a moving vehicle, and you won’t have to rely on an installer to come… you just get the device, sign onto the network and become an instant customer.
GOB: So, in that model then, how do you properly collect fees then?
BC: It’s an addressable system, so, for example if you went to the store and you bought a WiMax phone, it would be manufactured to the WiMax standards. It would recognize our network, and then you could self provision onto that network by giving us either a debit card or a credit card. And then we would enable your device. So, we’re going to be able to bill that for a day or for an hour – it just depends on how it’s marketed. Or by the month, by the year, whatever.
GOB: So, do you envision not having to build that big of a marketing and sales infrastructure then or technical infrastructure? Where do you see that going?
BC: Well, I think we’re going to concentrate in the next 12 months on building the network. So, we’ve got all the technical infrastructure in terms of people in place to build these networks… and they’re complicated, but at the same time they’re not that complicated because a lot of this equipment, even the network here, is plug-and-play.
So, once you get your cell tower up and the antenna up, the base stations are not that hard to hook up. And if there’s ever a problem with one of the base stations, swap it out and put a new one in and send the other one back to the manufacturer to repair.
GOB: How many people do you have?
BC: We have about just over 30 people working for us right now… most of them are in the technical department.
GOB: Do you still deliver TV to any customers in Manitoba?
BC: Yes… At one time we had our customer base in Manitoba and Honolulu – and they were both designed for TV delivery. We were approaching 18,000. We sold the Honolulu business to Clearwire (about four years ago) and then we used the money from that to buy other stuff, like Greece.
… (B)ut we’ve been winding down our subscriber base in Manitoba. With the TV subscription base there — we’ve been selling those customers to one of the satellite operators. We’re trying to make it easier for the customer to switch from our TV service to the satellite service.
Then we’re going to gradually decommission that entire network and build a brand new network that’s 100% WiMax compliant.
GOB: Okay, but if you’re going to go with new base stations and WiMax, you don’t envision yourself as another Sky Cable, I guess. You envision yourself as just providing the network and the customers can get video from wherever they fell like, I suppose.
BC: Yes. I don’t envision that initially these networks are going to be providing 150 channels of video.
GOB: You’re thinking more along the lines of Internet and video and clips and that type of thing?
BC: Yes. You’re going to be able to download movies, because you’re going to have a high speed connection. But you’re not going to be able – at least initially – to use our WiMax network to replace your satellite or your cable TV connection in terms of programming.
GOB: What are the speeds like?
BC: Each base station is capable of somewhere between initially about 100 megabytes of throughput, so, it just depends how many customers we load onto the network.
GOB: How many do you put on each base station?
BC: It depends, because not everybody uses it at the same time. But it depends, too, on what the customer wants. Some customers will want a high speed connection. We can guarantee like a super high speed connection, maybe a 3 or 4 Megabyte connection, we can actually deliver that because the software built into the network that you can control the speed that every customer gets.
It’s like cable TV, in the sense the way the cable delivers high speed Internet, we do the same thing as shared access service. So, the more customers you have, the slower the speeds would be
But it’s going to be very competitive to cable and DSL.
GOB: And are you looking for acquisitions as well? I mean if you’re going to be operating in Canada, do you see a way to get spectrum in southern Ontario and Quebec?
BC: We would like to think that some day we could either acquire some spectrum in Ontario and Quebec or else just do some sort of roaming deal or purchase somebody there that has spectrum. But, at the moment we don’t have anything concrete in terms of Ontario and Quebec.
GOB: But that’s something that you’re looking to pursue though?
BC: Well, we tried in the past to buy Look actually.
GOB: Oh that’s right.
BC: Yeah. But we were unsuccessful.
