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5 May 2022

WiFi M&A wave submerges Airties, ASSIA – at opportune time

Within the space of a few days, two of the WiFi world’s top cloud management specialists – Airties and ASSIA – have announced acquisition deals. Turkey’s Airties has agreed to a takeover by private equity firm Providence Partners, while US firm ASSIA (acronymizing Adaptive Spectrum and Signal Alignment) has sold its core assets to access networking company DZS. There cannot be any coincidence about timings, can there?

We believe now was a good time to sell for both parties, in a post-pandemic environment where the paramount importance of WiFi has been elevated, while at the same time growth in the top economies is approaching saturation.

Faultline is hoping to get the inside scoop from Airties leadership in the coming weeks. Until then, we must assess the short and long-term implications of these separate – yet connected – deals, that we believe have been a long time coming.

We had always expected Airties or ASSIA to fall to a tier 1 operator, someone of AT&T’s ilk, one of the largest customers for both suppliers. A takeover of either would have been one of AT&T’s smarter acquisitions, going by its fudged track record in media M&A.

Under private equity control, Airties believes it can take the leap into hypergrowth, but we have to ask ourselves how much runway is really left in terms of the most lucrative contracts? As well as AT&T, both Airties and ASSIA boast the scalps of some of the world’s largest operators. Deutsche Telekom is a shared contract, while Airties has Sky and Vodafone in Europe, and ASSIA claims Verizon and British Telecom.

Airties possesses a combined total footprint exceeding 80 million broadband households worldwide, while ASSIA trumps this at over 125 million contracted connections.

There is phenomenal room for growth for WiFi in emerging markets, particularly APAC, yet we have to consider the per-home value of growing economies for WiFi cloud management capabilities compared to those in strongholds for companies like Airties and ASSIA.

We have debated before how picturing APAC markets as having virtually worthless ARPU is the wrong mindset to go into business with. Suppliers in the broadband game argue that APAC is catching up to the US faster than we think, with more than 50% of the world’s fiber purported to be deployed in this part of the world.

In North America, growth in WiFi cloud management is slowing, as shown in a recent forecast from our research wing, Rethink TV. The report puts APAC as growing from 41 million WiFi cloud management homes in 2021, to over 326 million by 2026. Over the same period, North America grows from 53 million to 111 million WiFi cloud management homes, and Europe increases from 29 million to 155 million WiFi cloud management homes.

For Providence and DZS, these figures will send saliva glands into overdrive, but the issue we have is that virtually every major operator across North America, Europe and Australia not already running Airties, has gone with Plume (i.e. Comcast), or ASSIA (i.e. Telefónica). Targeting low hanging fruit is a small but risky step towards the eventual commoditization of WiFi cloud management.

Providence’s investment in the business plans to do exactly this – spearhead growth in new markets. But to do that, Airties will have to adapt its offering and perhaps blend into the cellular camp that is so prominent in Southeast Asia. Right now, we aren’t sure how Airties would achieve this, but its services must appeal to MNOs somehow – not just broadband operators or related WiFi service providers – to make a name for itself in reaching the next 80 million subscribers.

However, Airties promises that Providence will fund additional R&D and product innovation, as well as to expand sales and marketing teams. We endeavor to learn more about the R&D and product roadmap at Airties under new ownership.

By the same token, we have aired occasional concern in the past about ASSIA’s longevity due to changing tides, such as operators shifting interest from classic WiFi management as we know it to focusing on resource optimization on CPE.

Founded by legendary broadband name Dr. John Cioffi, the business has sold its CloudCheck WiFi experience management and Expresse access network optimization systems to DZS, which it says are deployed by more than 50 operators. DZS will take on some 110 ASSIA employees, although Cioffi will remain at ASSIA.

For DZS, the deal diversifies its portfolio of access points and gateways at a time when the business has struggled with supply chain disruptions throughout China.

CloudCheck’s differentiator has long been its ability to avoid vendor lock-in, porting its client on any device – reaching right down into performance on remote CPE to understand diagnostics. ASSIA has argued in the past that companies like Airties and Plume are hardware companies selling various flavors of WiFi management toolkits as added extras – a perception the two firms have worked hard to leave behind.

CloudCheck essentially takes experience from a home’s WiFi performance, reports this data to the cloud where machine learning algorithms analyze and then automatically tune WiFi performance. It can use techniques like band steering and multi-AP steering, after ASSIA started supporting multi-AP architectures in mid-2018. The main ASSIA strength is in storing channel configurations about which channel worked best at which time of day, or day of the week, and can automatically adjust its configuration when it is not performing well enough.

Both the CloudCheck and Airties portfolios provide features including real-time diagnostics, self-healing, and optimization of WiFi – allowing operator staff to peek into all connections in real-time in a household. This ties into the CSR (customer service representative) toolkit space which ASSIA has also been active in, to elevate necessary diagnostics required to guide customers through step-by-step processes for WiFi troubleshooting.

By selling its CloudCheck and Express products, ASSIA is left with an enterprise tool to manage residential connections targeted at the work-from-home era, called Equipe, alongside Commande, an end-to-end product providing analysis, recommendations and optimization for broadband services.

Airties, meanwhile, pioneered proprietary mesh WiFi, until standards like EasyMesh came along and forced it to diversify to cloud management, but in a way that used EasyMesh to its advantage as a quick and easy way to set up and optimize WiFi extenders or repeaters from different suppliers.

It got into client steering circa 2015, followed by a strong push into cloud-based management to reaffirm its hardware-independence (against what ASSIA has voiced), including smart moves such as jumping into bed with RDK.

Hopefully, we will have much more to report on the Airties story in the coming weeks.

What these two deals represent is the next wave of WiFi consolidation, following the silicon roll-up that saw Celeno acquired by Renesas in 2021 and Quantenna bought by On Semiconductor in 2019.