M2M Spectrum Networks launches network, but stays mum on customers

Startup firm M2M Spectrum Networks (a 2014 Fierce 15 winner) has launched its network in almost all the cities it intended to by year-end, but it has not yet announced any commercial customers and is still refining its business plan. The company still aims to provide a dedicated wireless network for M2M connectivity in ways that Tier 1 carriers can't or won't provide.

In an interview with FierceWireless, M2M Spectrum CEO Barclay Knapp said the company had intended to launch service in 194 cities by the end of 2014 and is "pretty damn close, and close enough that it counts." Knapp said that the company got within 10 percent of hitting its goal, implying a launch in around 175 cities.

Knapp said the company's network got off the ground thanks to M2M Spectrum's partnerships. The company is working with TrueNet Communications to manage the build-out; tower company Crown Castle for tower leasing and full site development services; and others. "It's really been a group effort to get us to this point," he said.

M2M Spectrum is using airwaves that are known as "Part 90 spectrum," which is narrowband spectrum that exists below 1 GHz in multiple bands, including VHF, UHF and the 800 MHz and 900 MHz bands. Part 90 spectrum is designated for "private land mobile radio services" and public safety users are one of the primary users of the spectrum.

Knapp said the company's network is operating in the 200 MHz band, which is licensed, but licensed on a so-called secondary basis. "That was what was available very quickly," he said.

Additionally, M2M Spectrum's network is using frequency-agile radios, and because of the narrowband nature of the Part 90 spectrum, the company's network can hop around on different channels and is not limited to just the 200 MHz band. The radios let the company operate in multiple bands, which the company plans to do next year, Knapp said.

Although the company's technology is coming into greater focus, M2M Specturm's business model is still somewhat murky. Like traditional ,carriers the company is open to charging customers per device per month, but M2M Spectrum also still envisions getting a percentage of revenue or a percentage of the value of the M2M application.

"Folks we're talking to about launching commercial service, they run on both tracks," Knapp said. The company's use of narrowband spectrum is well suited for devices that communicate infrequently in short duration and with low bandwidth requirements, he said.

Most carriers are keeping 2G service online for at least the next few years for M2M customers, but Knapp said that carriers are pushing M2M customers to LTE modules when they don't need to be on them. Natural customers of M2M Spectrum include vending machine companies, alarm companies, GPS tracking firms and fleet managers.

Knapp noted M2M customers generally pay carriers for connectivity, applications and support services. M2M Spectrum could take a percentage of that total bill if it worked with an application provider in exchange for providing the connectivity. It would not matter how many trucks or devices were connected--M2M would just want to take a percentage of the value of the contract, Knapp said.

M2M Spectrum is also developing a software portal for application providers to tap into or for customers to choose different application providers, almost like an app store. Knapp said the portal is "a little bit beyond beta" at this point and will be launched sometime in the first half of 2015.

Knapp declined to say which companies are customers or potential customers right now. He said the company's goal for 2014 was to get a handful of pilot customers to demonstrate the company's technology and network, and it accomplished that. Knapp said the firm has less than half a dozen pilots. The goal for next year is to sign commercial deals but Knapp said he could not predict when those might be announced, though he said the company is aiming for the late first half or early second half of 2015.

"We're very much building this bicycle while we're riding it," he said. "Our predilection is to get into business and learn as we can, but not rush it."

M2M Spectrum said earlier this year it aimed to cover 75 percent of the U.S. population by the end of 2015 and 95 percent by the end of 2016.

Knapp said the company has the ability to hit both goals, but expanding the network will depend on the location and needs of prospective customers, Knapp said. Knapp said the company hopes to have customers that are large enough to warrant that kind of coverage but the firm "won't just build it to just to have it."

Knapp said M2M Spectrum is privately funded in a "standard" way and is in "very good" shape, but said "I think we've been fairly creative in how we've done it." He declined to name the company's backers.

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