NextWave scoops up IPWireless

NextWave Wireless said today it is buying TD-CDMA technology company IPWireless for $100 million, adding the company’s standardized yet niche technology to its growing wireless portfolio.

TD-CDMA is considered a competitive technology to WiMAX and other 4G technologies. Sprint Nextel trialed IPWireless’ equipment along with Flarion Technologies’ Flash-OFDM before settling on WiMAX as its future mobile broadband platform. Since then, other companies have been eyeing the Flarions and the IPWirelesses of the world. Qualcomm bought Flarion for $600 million in 2005. It was assumed IPWireless would be next, but no buyer emerged until NextWave’s announcement today.

What makes the agreement puzzling about the IPWireless deal is that NextWave has reinvented itself as a WiMAX technologist after the would-be carrier emerged from bankruptcy. It used the proceeds from the sale of its controversial PCS licenses and a fresh start after emerging from Chapter 11 to launch itself back into the wireless business, this time using its capital to buy wireless technology vendors as well as new spectrum in the Advanced Wireless Services auction last year. While it has acquired non-WiMAX technologies, such as Wi-Fi from Go Networks and video codecs from Packet Video, the IPWireless acquisition seems to go square in the face of its WiMAX strategy. IPWireless has long held up TD-CDMA as an alternative to both current 3G technologies and the new WiMAX standard.

But Roy Berger, NextWave executive vice president of corporate marketing and communications, said that the acquisition has nothing to do with the technology wars. NextWave is looking to create a varied and flexible portfolio beyond WiMAX technologies, he said, which also explains its interest in Wi-Fi through the Go acquisition and packet TV through the Packet Video buy. In some areas of the world—Europe in particular—spectrum is designated for specific technologies like TD-CDMA, he said. In addition, IPWireless has carved out specific niches for itself such as in the government sector. In September, IPWireless was part of a $500 million contract to build New York City’s new public safety network, alongside of government contractor Northrop Gruman. IPWireless has optimized its TD-CDMA technology for applications like multi-cast TV, which fit in perfectly with the rest of NextWave’s portfolio, and its core TDD technology will likely have a place in future broadband wireless technologies, Berger said.

“IPWireless is highly relevant to our WiMAX development,” Berger said. “We’ve always been impressed by the fact they’ve been able to not only innovate but commercialize products.”

The initial $100 million deal will come in the form of a $25 million cash payment and $75 million in NextWave stock, which may put Sprint in a strange position since it was one of IPWireless’s late investors. In addition, if IPWireless meets certain revenue milestones by 2010, the deal could balloon into one worth $235 million.

NextWave still hasn’t settled the question of whether it will be a carrier or vendor, but according to Berger, it is opting for a middle road to spur adoption of its technology, much like how Qualcomm has created its own mobile TV service provider to kick start its Forward Link Only Technology. Berger said NextWave would offer spectrum and technology as a package to carriers looking to get into the WiMAX or broadband wireless space, but has no plans to launch its own service provider.