|
by Barbara Shecter
The Financial Post
Sep 17, 2007
|
|
Three years after a less-than-glorious exit from the media stage, Manitoba's Craig family is attempting to re-emerge with a plan to capitalize on the next phase of wireless telecommunications technology.
In the process, brothers Drew and Boyd Craig will go up against industry giants Bell Canada Inc. and Rogers Communications Inc. to offer customers voice, data and video on wireless devices through a WiMax network, billed as the next generation of WiFi that sends wireless transmissions over long distances using radio signals.
The Craigs, who are perhaps best-known for now-defunct Craig Media Inc. -- a TV broadcaster whose A-Channels were sold to CHUM Ltd. for $265-million in 2004 -- have folded a small wireless business into a public company and raised $40-million to expand a fledgling WiMax network in British Columbia and Manitoba.
The plan to develop a WiMax network required the Craigs to wind down a television-distribution business that at one time had about 18,000 subscribers.
"We always thought these networks would be useful for something other than what we were doing with them," said Boyd Craig, who ran the "legacy" wireless television business during the past decade and remains chief executive of the new venture. "The whole WiMax thing took a while to develop."
Along the way, other wireless licences were picked up in the Coachella Valley region of California and in Greece, where broadband technology is available in only 4% of homes, compared with about 50% in Canada, according to Drew Craig, the former Craig Media chief executive who is now executive director at Craig Wireless Systems Ltd.
WiMax technology is primarily used in remote areas that don't have access to other wireless options from cable or phone providers, but the Craigs expect WiMax to gain popularity next year when Intel Corp. begins to build the technology directly into mobile devices and laptop computers.
The Craig family, including brothers Drew, Boyd and Miles, will own about 67% of the company. Institutional investors who bought into the private placement own the balance of shares which began trading yesterday on the Toronto Stock Exchange.
The Craigs could face formidable foes in Rogers and Bell, which share a WiMax licence through a venture called Inukshuk that gives them access to Canadian provinces with the exception of Saskatchewan and Manitoba.
Boyd Craig said he isn't afraid to take on the telecommunications giants, for a variety of reasons.
First of all, the established players run the risk of cannibalizing their other phone, cable, Internet and wireless businesses, a problem Craig doesn't have to consider when setting prices because it has placed its bet entirely on the new technology.
And revenue isn't the only consideration, added Mr. Craig. "One very effective way we compete is by keeping our operating cost base lower than theirs," he said.
Finally, he added, Craig could benefit from what could turn out to be the awkward partnerships between two staunch competitors on other fronts. Rogers and Bell "haven't been too friendly in other ventures," he said.
Kaan Yigit, president of Solutions Research Group Consulting Inc. said he views the Craig business as a "niche play at this point, but it has definite upside potential."
Buzz is increasing from the U.S. where technology giants such as Google Inc. and Apple Inc. are reportedly eyeing spectrum, he said.
"The way I see it, its like a real estate play -- buy cheap in far away places and hope the tourists and population growth comes your way. Spectrum is valuable as there are more potential applications today with explosion of mobile and wireless devices."
Until 2004, the Craigs ran a successful media business. They sold after a disastrous foray into the fiercely competitive Toronto television market from the stronghold in Edmonton, Calgary and Winnipeg. Craig funded the venture by taking on $110-million investment from Providence Equity Partners Inc., which gave the Providence, Rhode Island private equity firm nearly 20% of the company. As earnings declined, it is widely believed that Providence pressured the Craigs to sell to Toronto-based CHUM Ltd.
|
|
