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FiberTower's Fix on Wireless

Back from bankruptcy, so-called fixed wireless makes a humble return to the stock market.

FiberTower, a closely held joint venture involving cell-phone antenna operators Crown Castle (CCI - Get Report) and American Tower (AMT - Get Report), said Monday that it has agreed to merge with First Avenue Networks (FRNS), previously known as the failed Advanced Radio Telecom.

First Avenue will issue 73.7 million shares worth about $873 million. The move effectively brings FiberTower public under the First Avenue Networks' ticker, FRNS.

The combined company, to be called FiberTower, is the first wireless broadband service provider to reach Wall Street, and others are maneuvering backstage. Under the banner of wireless backhaul, some of the broken wireless outfits of the late '90s boom era have targeted a niche opportunity and a chance for resurrection.

Fixed wireless systems, unlike mobile wireless, send lots of signals quickly from one point to another. This is where backhaul comes in. Weather permitting, the technology can link cellular antennas to a telco's phone switch, and is seen as an alternative to wireline connections. This "middle distance" represents a piece of the wireless network costs that phone companies like Verizon Wireless and Cingular may want to trim.

Fans point out that there are several telcos with tons of antennas to be linked, and wireless backhaul could prove to be an economical alternative. Of course while the number of backhaul opportunities is huge, the revenue so far is less than staggering.

First Avenue, for example, posted a net loss of $11.3 million last year on $1.3 million in sales. In other words, the company lost nearly $9 for every $1 it brought in.

Nearly the entire fixed wireless sector went bust and emerged from Chapter 11 in one form or another in the past few years. The once-bankrupt Teligent was bought by First Avenue last year. And reorganized wireless broadband outfit XO started its own backhaul unit in April, reclaiming the Nextlink name.

Still, while fixed wireless failed to replace fiber and copper wire connections, delivering wireless backhaul seems to be more within reach for the revived upstarts.

First Avenue shares rose $2.44, or 25%, to $12.10 in midday trading Monday.

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