NEW YORK-Anticipating a $2 billion market in Internet-based wireless services by 2003, Motorola Inc. and Cisco Systems Inc. announced June 7 they would buy the fixed-wireless assets of Bosch Telecom in Richardson, Texas, for an undisclosed amount.
With the acquisition, the two companies plan to form SpectraPoint Wireless to deliver high-speed data, voice and video services to businesses and consumers. The Bosch assets consist of a broadband system built around local multipoint distribution services, which supplants wired phone and cable TV lines with a fixed wireless transmission system.
Motorola and Cisco said they expect to announce several major contracts soon with customers that will use their LMDS technology to deploy combined telephone, television and Internet services.
LMDS can transmit up to 100 times faster than cable TV connections and telephone Digital Subscriber Lines. However, LMDS transmitters are negatively affected by rainstorms, and they require a direct line of site to the customer.
Motorola will own 81 percent of the SpectraPoint Wireless venture, and Cisco, 19 percent.
“Motorola right now is one of the top three [companies] to have this product,” said Wojtek Uzdelewicz, a telecommunications equipment analyst for SG Cowen Securities Corp.
“Lucent (Technologies Inc.) and Nortel (Networks) have similar offerings, but a lot of the other vendors still don’t have it.”
The Bosch purchase expands on an alliance announced earlier this year between Motorola, a wireless communications equipment manufacturer, and Cisco, an Internet networking equipment maker.
“I think working with Cisco is going to become a major initiative for [Motorola],” said Tim Luke, a telecommunications equipment analyst for Lehman Brothers Inc.
In February, the two companies said they would invest $1 billion in research and development centers during the next four or five years for third-party developers. They also agreed to create a new, Internet-based architecture for cellular services focused on mobile workers. The architecture of the Internet framework will be designed to perform across all wireless standards, they said.
SG Cowen’s Uzdelewicz estimated Motorola and Cisco paid about $100 million for Bosch’s LMDS assets.
“They have gotten a rapidly emerging technology at a good price,” he said.
The Bosch acquisition is expected to close by the end of June, provided it receives regulatory approval.
