Mike,A few points to consider concerning barriers to entry:-* As...

Mike,

A few points to consider concerning barriers to entry:-

* As a starting point its important to recognise that this is a niche business, so its only going to attract a certain category of competitor. Telstra or other industry behemoths are unlikely to enter this space as in their minds its probably not worth the effort. If there were interested it would make more sense to takeover BGL as opposed to setting up their own network (see comments below in terms of CAPEX etc);

* BGL currently enjoys dominant market participant advantage having acquired its largest competitor CVA at the end of last year. This may put of competitors willing to enter in having to compete in an oligopoly market against a dominant market player. There are other WiMax players like VividWire, Allegro Networks and Internode. Allegro and Internode appear to be more focused on the retail end or concentrated in one particular area. BGL (leaving aside the community internet space) is focused solely on the SME market. VividWire has presence in the metro markets however has been around for a while and has not dramatically expanded like BGL. In any event BGL's main service is internet with some of the niche benefits of WiMax coverage, but it still has to compete/differentiate against the copper and optic networks of other players and it has done exceptionally well to date measured by revenue and NPAT growth vis a vis its alternative network peers;

* BGL has built the scale to enjoy the niche nature of the market. Its acatually a high CAPEX business in terms of setting up and expanding the network so a new competitor is going to have to spend a fair amount of CAPEX intially over the first few years before generating commensurate cashflows. This may put off further players interested in competing. Why spend a lot on CAPEX and compete against a dominant pariticipant when you arent going to get decent returns for a few years? BGL has spent a considerable amount of CAPEX over the last few years to build a good widereaching network and has further CAPEX syngergy to extract from CVA POPs (see below) which can be redeployed. Notwithstanding BGL cashflow has always been strong and now its has the scale to continue expanding but also paying dividends etc (as predicated by Microequities). Industry consolidation is always talked about in the telco space but perhaps its more of a possibility with BGL now it has the increased scale. Why try and set up your own WiMax network when you can go and buy BGL which is still cheap (at current prices) relative to its peers?;

* BGL has POPs (points of presence) across most metro locations and have picked up same via the CVA acquisition. I am assuming that BGL and CVA being the recent dominant players in this market acquired the best PoPs. Thats not to say another player perhaps couldnt build another network with PoPs in other locations however it may be more difficult;

* I lack a bit of the knowledge on the pure technical side (so I am more than happy to be corrected) however I think there is an actual limit to the number of WiMax players that can enter as there is a physical limit to the amount of spectrum that is available in order to provide for the wireless transmission of data. Thats why you have some of the wireless players in the USA talking about industry consolidation as a matter of necessity;

If you want to find out more about the BGL network, jump on the BGL website and download and read through the white paper. I only stumbled onto this recently and for me being a person without a huge grounding in the technical side of the BGL product, I think it provides an excellent summary in laymans terms.

I agree the press has recently provided greater coverage of BGL however this was only a matter of time. I have held a position in BGL (with varying degree of exposure in terms of my portfolio) since February 2010 and materially increased my exposure recently. The story has been out there for a while now however the recent May announcement in terms of guidance was the catalyst for those on the sidelines to place their bets. I think for many they feel achievement of FY12 earnings growth has been derisked and therefore were more comfortable obtaining or increasing exposure. BGL has been cheap for some time and has been in a tight banded consolidation for some time so this recent break out was only a matter of time. Looking back at recent catalysts for share price movements like February 2010 on earnings release the share price seems to run hard and then consolidate. Are we going to run to 30 cents and then spend some time consolidating. Looks likely.

I have a price target of 30 cents and given recent action feel we could be there sooner than I expected (which was February next year incidentally)