Azulstar, back on track in Grand Haven, launches WiMax

By Lynn Stevens | Business Review Western Michigan

Thursday October 16, 2008, 8:00 AM - AzulStar Inc., which in 2004 made Grand Haven the first city with municipal wireless access, is back to its hometown with a technically better offering than Wi-Fi — WiMax.

“It takes exactly what we were doing except across miles instead of feet, and it makes service more reliable and faster,” founder and CEO Tyler van Houwelingen said. “I can’t tell you enough about how WiMax is the real deal.”

The company quietly launched its MetraMAX service in Grand Haven, that city’s close neighbors Ferrysburg and Spring Lake, and in Grand Rapids in late September. That was just two weeks before Intel Corp. released the first laptop with built-in WiMax and Sprint Nextel launched its Xohm WiMax network in Baltimore.

The West Michigan launch isn’t a trial balloon for AzulStar. In a project with International Business Machines Inc., it set up a network for the police department in Miami Beach earlier this year. It’s working with private investors to build a WiMax network in Indianapolis and another in Las Vegas.

WiMax wireless signals travel farther than Wi-Fi signals, so the number of towers and relay points is sharply lower for the same coverage area, van Houwelingen explained. In the Grand Haven area, it took 175 Wi-Fi antennae to provide coverage — the new WiMax system requires just two.

A stronger, faster, more reliable technology that costs less to install is attracting companies and municipalities worldwide.

Among the early adopters is Grand Rapids, scheduled to launch its municipal WiMax system from Clearwire in early 2009. Chicago and Washington, D.C., also await municipal WiMax systems in 2009.

Companies such as Intel — the largest company in the world backing WiMax — Samsung, Motorola and Google all are investing in the next-generation wireless system.

All those factors have encouraged private West Michigan investors to back AzulStar’s WiMax. Private investment will enable build-outs with no debt, van Houwelingen said.
AzulStar is operating from a different model than previously, he said. He compared it to a franchise, although the systems technically are licensed arrangements.

The network AzulStar is setting up in Indianapolis, for example, is a limited liability corporation, and the investors will share profits from that operation. The network in Las Vegas is a separate corporation, and its investors will profit from Las Vegas but not Indianapolis.

And the new networks won’t be city owned.

“Maybe a city will be a customer, but not a partner,” he said.

A year ago things didn’t look so rosy for AzulStar. The company was working exclusively in municipal Wi-Fi networking, and, although it was growing in 2006, that market collapsed in 2007, van Houwelingen said. One of the biggest players, Earthlink, pulled out of the municipal market, as did several other providers.

IBM Global Finance was backing AzulStar in 2007, and a former IBM executive, Yorke Rhodes III, was CEO, after van Houwelingen withdrew from active management.

Following Earthlink’s retreat, IBM Global Finance declined to pay for transmitter-tower construction. IBM and Cisco Systems Inc. pulled out of their agreement to finance AzulStar’s building of a Wi-Fi network for 40 cities in Silicon Valley.

“Deals we had financed were not financed and did not go forward,” van Houwelingen said.

The final blow was getting kicked out of Rio Rancho, N.M. — the next city AzulStar had unwired after Grand Haven. T-Mobile and Verizon Wireless sued the city for alleged preferential treatment in awarding AzulStar its Wi-Fi contract.

To avoid a prolonged court fight, the city dismissed his company, van Houwelingen said.

AzulStar’s loss of the contract was due to a series of breaches in its license agreement, argued Rio Rancho’s City Contracts Administrator Steve Ruger.

When IBM and its management team stepped out of the picture, van Houwelingen stepped back in. The family had kept majority ownership and did not have to buy AzulStar back.

AzulStar is seeking a different market for its MetraMAX service. It’s going for the enterprise-business market through Grand Rapids-based resellers Trivalent Group and Source I.T.

“We’re focusing on high-end business,” van Houwelingen said. “Our best customer is an enterprise customer for their main connection or backup to their main connection.”