By Joel Schofield

Advanced Radio Telecom (ART) successfully reorganized and emerged from Chapter 11 protection under the reorganization plan approved by the US Bankruptcy Court in Delaware on October 31, 2001. The Company, whose principal assets are licenses that comprise a nationwide footprint of 39GHz spectrum, changed its name to First Avenue Networks and relocated its offices to Charlottesville, VA from Bellevue, WA.

The company says the Chapter 11 process was swift and resulted in a strong capital structure. Virtually all debt, preferred stock, and other pre-filing debt obligations have been converted into equity of the reorganized company. No distribution to former common shareholders was included in the reorganization plan, and all existing ART common shares were canceled.

The reorganization plan provides for the issuance of 20 million shares of common stock. Approximately 6 million shares not held by affiliates will be exempt from registration under the Securities Act of 1933 and, thus, available for resale immediately. First Avenue Networks will be traded on the OTC-BB, beginning approximately January 31st.
First Avenue Networks has a new management team and board of directors lead by longtime fixed wireless industry executive Dean M. Johnson as President and CEO.

Recently, Mr. Johnson sat down with Broadband Properties Executive Editor Joel Schofield to discuss First Avenue's plans and what role the residential and commercial property market will play in the company's future.

Joel Schofield (JS): Welcome back. What led to your buying the assets of ART?
Dean Johnson (DJ): We looked at the essential assets of Teligent, Winstar and ART and realized the most valuable and durable asset was the spectrum licensed from the FCC. In our analysis, Teligent and Winstar got those frequencies inextricably intertwined in a particular business model and after a while they became impossible to untangle from that model. By comparison, ART didn't get that far into a particular business model so there wasn't too much to untangle. The reason Winstar sold for so little was that it was hemorrhaging cash. It was like buying the ranch you always wanted to have in Montana-it is not the purchase price that gets you, but tending 50 miles of fence gets expensive. Winstar and Teligent have a lot of overhead and are still shedding assets. By contrast ART was close to being at its nucleolus, its spectrum, and therefore much more easy to deal with. The combination of simple assets without a lot of legacy operations made it an attractive deal.

JS: Is technology a concern for you today?
DJ: Some, but not nearly as much as it was in the past. We were very impressed when we visited the WCA Technical Symposium in January. There were encouraging point-to-multipoint technologies available or soon to be available for the 39GHz spectrum from companies like Ensemble, Netro and Harris.

JS: What type of model do you expect to implement moving forward and will it be solely on the wireless platform?
DJ: We don't see ourselves providing retail services to tenants in buildings. Rather, we will use our frequencies primarily to work with telecommunications providers to employ the wireless medium to access properties. We have a deep portfolio of great spectrum in the largest and most important markets and will put up radios and install wireless links as a part of telecom providers networks wherever they want it and however they want it. That is our position right now-we are very much using a wholesale approach.

As far as our platform, our view of the world is that we are a wireless telecommunications company. We know that wireless is not right in every circumstance, but it is superb in certain situations. We will target those applications and make our product available to diversified telecommunications providers. Our goal is to be the frequency and transmission provider of choice for situations where wireless is the most effective solution.

JS: What turned you away from the retail provider model?
DJ: So few companies have successfully executed the retail model that it really gives one trepidation. One of the first things we did was to evaluate exactly why ART failed and then compared its situation with Teligent, Winstar and other failed providers. We found that the relationship with building owners played a very important, although not directly causal, role in the failure of these companies. Companies like Teligent, ART, and Winstar rushed to get rooftops. The building owners, rightly so, were more than happy to charge what the market was bearing and the market was bearing some large numbers. So, when we did the income statements on these companies, we found that they paid the building owners a disproportionate amount of a building's revenue on mostly a fixed fee basis, as opposed to a succes basis, and that the real estate cost was too much to bear. That is not to say that all of the other costs incurred were in line, but that the real estate costs were a key contributor to uneconomical buildings. So as far as the retail model, we will leave it to those companies that are expert in, or maybe have found more creative ways for the building owners and the competitive telecom providers to work together.

JS: What do you feel has to happen at the provider level and the property level to have consistent, long-term success in the market?

DJ: I think that everyone's expectations in the 'go-go' late 1990's got pretty far out of whack. So to get back on track, while I don't have the perfect prescription, I do think it is going to require a sense of moderation from all sides. The next generation BLEC or any competitive telecommunications provider and the building owners have to see themselves on the same side of the issue. They need to work together to make enhanced telecommunications services an amenity to the building. If building owners look at this and say 'this is my roof and it goes to the highest bidder,' then either the boom and bust mistakes of the past are going to be repeated on these properties or broadband services will be slower to develop. Either way the tenants will be the losers. If the building owners want to foster better service and more innovative products for their tenants, then all sides need to be able to work together toward the common goal of satisfying the broadband needs of tenants.