NEW YORK-Pathnet Inc. hopes to raise $100 million by going public to help finance its goal of becoming a national carrier’s carrier in smaller markets by upgrading existing wireless infrastructure to develop a synchronous optical network (SONET) system.
Pathnet intends to provide a high-capacity, dedicated network to interexchange and local exchange carriers, Internet service providers, regional Bell operating companies, cellular carriers and telecom service resellers.
The Washington, D.C.-based company filed May 8 with the Securities and Exchange Commission for an initial public common stock offering, which Merrill Lynch & Co. Inc., New York, will lead manage.
“Based on market research the Yankee Group provided [us], the estimated addressable market for Pathnet’s services are expected to grow to about $17 billion by 2008 from $6 billion in 1998,” the company’s SEC IPO document said.
“The Yankee Group attributes the increase to the expected shift of interexchange services from established carriers like AT&T Corp., MCI Communications and Sprint Corp. to non-facilities based interexchange carriers, which are more likely to rely on alternative carriers like Pathnet to transmit traffic.”
“The company plans to deploy its digital network by upgrading, integrating and leveraging existing telecommunications assets, sites and rights-of-way, including those used by railroads, utilities, state and local governments and pipelines,” Pathnet said.
“By integrating existing networks of these incumbents, Pathnet expects to obtain the equivalent of a nationwide spectrum license at minimal licensing cost.”
Pathnet said it has completed about 800 route miles of its SONET network and is building an additional 2,100 miles. Its plan is to deploy within two years a SONET network covering 29,000 route miles in 34 states, with the ultimate goal of 100,000 miles. It seeks to serve second-and third-tier domestic markets.
Toward that end, Pathnet said it already has entered binding agreements with seven companies for initial design and construction of 7,000 of the 11,000 route miles under their control.
Six of these seven agreements “are long-term, fixed-point microwave service agreements” with Enron Corp., KN Energy, Idaho Power Co., Northeast Missouri Electric Power Corp., Northern Indiana Public Service Co. and Texaco Inc. The seventh is with American Tower Corp., “which controls certain telecommunications assets, including some divested by CSX Railroad, ARCO Pipeline and MCI Communications Corp.,” Pathnet’s registration filing said.
Pathnet said it has identified incumbents “holding or operating private networks that in aggregate cover 465,000 route miles and has met with more than 300 of these.
“To date, 47 of them, which control about 89,000 route miles, have authorized Pathnet in writing to prepare preliminary engineering evaluations for the purpose of entering long-term relationships.”
Pathnet said Bell Communications Research has evaluated its system design and existing network of about 800 route miles.
