John Muleta’s M2Z Networks wants to give away mobile WiMAX service in exchange for your ZIP code, with which you’ll get location-based services. But first the company must tackle incumbent carriers and the FCC.
Most people in U.S. technology circles know about Clearwire, which plans to build a national mobile WiMAX network – $3.2 billion in investments from companies like Sprint, Google, Comcast and Time Warner make it easy to get attention. But for John Muleta, the co-founder and CEO of a mobile WiMAX startup called M2Z Networks, attention comes when he says those two words consumers love to hear: cost-free.
M2Z?
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The name “M2Z” has two meanings. The letters are initials of the first names of John Muleta’s and Milo Medin’s children. It also means “moving to zero,” which is a play on the cost-free aspect of the company’s business plan.
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M2Z plans to answer an opportunity pounding on the door of the wireless industry. The opportunity, Muleta says, is for phone companies to be more like Silicon Valley innovators by offering basic service for free in exchange for users opting in to share demographic data, thereby creating location-based advertising sales.
“Americans take to that,” the engineer-turned-regulator-turned-entrepreneur said. Historic examples include free broadcasting of radio and television; recent examples are free search engines and MP3 archives, while the future example may be the transition from per-minute Internet access to unlimited access to cost-free access, he said. M2Z also can offer wholesale access to the network itself, he added.
Whether that can really work is open for debate. M2Z hopes to use controversial Advanced Wireless Services (AWS) spectrum – specifically 20 MHz from AWS-3 and 5 MHz from AWS-2 – to make its network available to 50% of Americans within 4 years of a not-yet-determined starting date. He said all of the necessary technology ingredients already exist in off-the-shelf form or are just about ready, despite numerous telecommunications insiders who say the plan is technologically and commercially unrealistic.
Telecom Roots
Yet if anybody really knows what it takes to rock the telecommunications boat, it could very well be Muleta. He has a degree in engineering and he dug to install cable wires and pulled fiber-optic wires in Florida, eventually obtaining a combined JD-MBA degree. In 1994, he moved on to 4-year role at the FCC, where he became deputy chief of the Common Carrier Bureau and chief of the bureau’s enforcement division, followed in 2003 by a 2-year stint leading the Wireless Telecommunications Bureau. In between, he worked at PSInet, the Internet service provider that went bankrupt in 2001.
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| Muleta: Final-mile innovation is the big opportunity. |
Muleta said he learned from all of those jobs, which led him to the M2Z plan along with help from his business partner Milo Medin, whose experience includes being a supercomputer programmer and NASA engineer and who co-founded the @Home cable modem network.
“Both Milo and I had come to the realization that last-mile access was a fundamental aspect of encouraging competition and innovation in the sector… over time, we were able to identify that TDD [time-division duplexing] use of spectrum could actually be very efficient in delivering broadband service in competition with wired broadband, not with voice mobile services,” he said.
“We sort of put 2 and 2 together and said, how could we do this? Where is the spectrum available? What is an innovative proposal that would accelerate the availability of this kind of service,” he continued. That led to more questions. “What is it that we could do both as a company and as public policy guys to encourage broadband adoption? … What is going on in Silicon Valley, what’s going on in communications services and what has the highest rate of adoption?” The culmination of all those questions and the focus on respecting control of the final-mile connection is how the M2Z plan was born, he said.
Dissenters
It may be a big-picture idea, but companies like AT&T and T-Mobile do not intend to let any startups change the industry scenery. The biggest short-term challenge for M2Z is to convince the FCC to put spectrum up for auction that can be used with a TDD approach instead of with the more traditional frequency-division duplex (FDD) approach, even though the FCC’s original plan called for a public-safety network instead. Currently, T-Mobile is the most outspoken carrier, arguing to the FCC that the TDD plan would interfere with T-Mobile’s existing FDD allowance. Muleta disputes that, saying T-Mobile caused its own interference problem after it started using unauthorized South American filters in its handsets, which guard against a wider swath of spectrum than the carrier has permission to use.
“There’s a tremendous amount of spectrum that could be made available but it requires innovative thinking to take place,” he explained. “It’s traditionally that the commission, the FCC’s processes, are done in such a way that it favors, even though the commission tries very hard not to be technologically biased, it does end up essentially promoting inefficient FDD technologies over unpaired TDD technologies. And if there is more of unpaired TDD spectrum available, then it would create even more vibrant competition for broadband, as opposed to just for voice competition. So TDD would really strike at the heart of getting more broadband to Americans because it’s a much more efficient mechanism and advances in the Silicon Valley area, technology and processing power make that a much better way to go about it,” he said.
According to Muleta, incumbents like to focus on interference because it’s always a hot-button issue at the FCC, but he said in this case, it’s just a smokescreen for the lack of legitimate objections to the M2Z roadmap.
“So if you can’t win on the policy argument, you bring out the interference issue because it’s sort of a very complex technology issue. If multiple people say there are issues here, then it sort of takes on more credence than it should. But again, you have to look at who’s saying it and why would they be interested in saying something against an innovative new service using a technology that is brand new in the United States? … It’s because it would take away their market share.”
Partner Support?
Muleta said M2Z is already talking to technology partners and has given some thought to how the network architecture would look. Mostly it would use off-the-shelf components that are more popular overseas, he said. He declined to identify any specific partners.
Tom Peters, a partner and consultant at Wireless Strategy, said that before M2Z unveils the details of its primary technology plan, the company should cut a reality check as large as its venture capital checks. “They’re certainly not a company that’s set up to build out a network and they would need to get someone involved,” such as Google or another new industry entrant, he said. It’s unlikely that a major wireless carrier would be an M2Z partner, because Sprint Nextel already has its mobile WiMAX money invested in Xohm and Clearwire, while the other Tier 1 carriers all have said their mobile broadband strategies involve LTE being ready in the 2010 timeframe, Peters noted.
Nor would Muleta explain his company’s plan in case the hoped-for spectrum does not come through, but Peters said M2Z is understandably focused on its Plan A for now. However, “His Plan A is destined for failure. I don’t think there are too many people who are knowledgeable in the industry, as it’s laid out, who think he has any chance for commercial success. Certainly, there’s a lot of sandbagging going on in both directions,” Peters added.
Regardless, Muleta is laser-focused on getting his spectrum, getting AT&T and T-Mobile off his case and doing whatever he can to make the FCC give him a chance. At PSInet in the early 2000s, he had a front-row seat to the dot-com implosion, where he said he learned a major lesson: “I think the most important thing is that last-mile connection and control over it is probably the most important struggle there is in the telecommunications industry. It’s very difficult to do, the incumbents have a lot of advantage in that space. It’s very difficult to go dig up the streets and put in local fiber access especially if you’re a new service line.”
Just as telecommunications outsiders Apple and Google are shaking up the wireless handset business with previously unheard of distribution and operating system deals, so too can M2Z shake up the incumbent wireless network operators, Muleta said. He even welcomes direct competition.
“If I start a Subway sandwich shop on a street corner, there’s nothing preventing Quiznos from coming on the other side,” he said. “That’s what broadband ought to be like.”
| Muleta’s Resume |
- 1986 – Graduated from the University of Virginia with a systems engineering degree
- June 1986-June 1989 – GTE – Various roles in engineering, marketing, marketing
- 1993 – Graduated from the University of Virginia with a combined J.D./MBA degree
- Sep. 1993-Dec. 1994 – Coopers & Lybrand – Sr. Associate in Telecommunications and Media Practice
- Dec. 1994-Jan. 1998 – FCC – Common Carrier Bureau, Enforcement Divison
- Feb. 1998-Jan. 2001 – PSINet – Various executive roles in development and strategy
- Jan. 2001-Aug. 2001 – Navisite – Executive VP
- June 2001-Dec. 2002 – Tellus Technology – CEO
- March 2005-April 2006 – Partner at Venable LLP, a Washington, D.C. law firm
- Dec. 2005 – present (overlapped with law firm) – CEO of M2Z
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