IF CONTENT IS KING, what about businesses that serve content providers?
The buzz in tech circles these days is all about Network Neutrality—the idea that consumers should have unrestricted access to legal, online content. Already, the Federal Communications Commission has set in motion a process to broaden access for users. The government is also under pressure from consumers to prevent cable and telecommunications providers like Comcast and Verizon from switching to usage-based pricing for broadband service, rather than the traditional flat fees.
In this telecommunications Wild West, where everything seems to be up for grabs, at least one business that serves content providers is thriving. Mobilitie, based in Newport Beach, Calif., builds and services communications towers for wireless carriers like AT&T and Sprint. In addition to 3,000 towers across the U.S., it has vast networks of fiber optic cables that telecommunications companies use to send Internet and cable transmissions, as well as telephone and television signals.
If all goes according to plan, Mobilitie will have accrued just under $100 million in annualized revenue by the end of 2009 — a 100% jump over the year before, according to Mobilitie’s founder and CEO, Gary Jabara. (Jabara wouldn’t disclose company’s profits, but says earnings are up over last year.)
SmartMoney asked Jabara about the ups and downs of the wireless business. Here are his condensed answers.
You’re a veteran in the wireless industry. What were you up to before launching Mobilitie in 2004?
I was one of the first guys to start building wireless infrastructure in the wireless industry. I started out working with Craig McCaw, the founder of McCaw Cellular, which is now part of AT&T Mobility, and Clearwire Corporation. Around that time in the early ’80s McCaw was buying up cellular licenses and making a pretty penny doing it. I then went on to head Deloitte & Touche’s wireless consulting and real estate practice for a number of years.
Business: Mobilitie, a wireless and telecommunications infrastructure provider.
Location: Newport Beach, Calif.
Year founded: 2004
Number of employees: 60
Web address: www.mobilitie.com
Mobilitie builds communications towers and leases them to wireless carriers. And sometimes multiple carriers will use the same tower. Why don’t they build their own towers?
Carriers have traditionally been forced to choose between an internal ownership model and that of a leasing model. Like Mobilitie, public works companies offer to lease towers to carriers. However, they will also restrict a carrier’s operations in ways that lead to higher costs over time. And although owning a tower provides a high degree of operational flexibility, it also presents significant capital costs. Rather, we build towers and allow carriers to lease them, but we don’t also restrict what kinds of data carriers transmit via our towers. To rent one of our towers, the national average amounts to $1,500 to $1,900 a month per lease. However, as multiple carriers occupy the same tower, rental prices decline.