WiMAX from DirecTV

Reuters recently reported that Alvarion Ltd. is negotiating with US satellite television giant DirecTV Group to supply WiMAX equipment. The report follows comments by Alvarion CEO Zvi Slonimsky at the Reuters Telecommunications, Cable, and Satellite Summit in New York.

Mr. Slonimsy did not disclose the size of the deal, but since DirecTV has 16.1 million subscribers in North, Central and South America, Alvarion´s potential revenue from a contract could total tens of millions of dollars at the very least. Slonimsy did not say whether Alvarion would be the exclusive supplier of WiMAX equipment to DirecTV, or if there would be additional suppliers. Nor is it known how many DirecTV subscribers would receive WiMAX services in the first stage. For this reason, the amount WiMAX equipment Alvarion would deliver in the first stage of a contract, after a trial period, is not known either. In addition, since DirecTV would first test systems, Alvarion would not see revenue from a contract in the coming year.

"Wireless communications infrastructure will speed up the use of DirecTV´s networks," said Slonimsky at the conference. "The group is now testing WiMAX infrastructures in order to provide its satellite television network sububscribers with high-speed communications on the return channel."

When DirecTV installs WiMAX, its subscribers will be able to transmit data to the network over its own infrastructure. WiMAX has significantly greater bandwidth than current bandwidth used for this purpose. Consequently, DirecTV will be able to sell broadband services on its network, including online video games, video clips, pictures, and a wide range of other interactive services.

At the “Reuters” conference, Slonimsky predicted that most of Alvarion’s revenue in 2007 would come from WiMAX equipment. Analysts predict that when WiMAX installation takes off, Alvarion (Nasdaq:ALVR) and its competitor Airspan Networks (Nasdaq:AIRN) will become attractive acquisition targets by telecommunications equipment giants.