Microsoft (MSFT - Free Report) recently entered into a partnership with Ontario, Canada-based wide-area wireless network provider, Redline Communications. Per the deal, Microsoft’s Airband Initiative partners will have access to Redline’s Virtual Fiber radio technology.
The alliance is aimed at providing cost-effective broadband internet services to “underserved and unserved” rural communities worldwide.
As part of Airband Initiative, Microsoft partners with telecommunications companies and internet service providers ("ISPs") to provide innovative solutions which enhance rural connectivity. Digital skill training is also imparted to the people under the initiative.
The tech giant intends to utilize the unused television broadcasting frequencies, termed as TV White Space (“TVWS”), to dedicate a robust broadband internet connection to rural areas that presently lack the architecture.
The company’s Airband Initiative is an attempt to augment broadband coverage leveraging various technologies comprising the innovative TVWS, among others.The initiative aims to narrow the broadband gap by enabling around 2 million rural Americans access internet by 2022.
TVWS Tech: A Key Catalyst
TVWS generates broadband connections in ultra high frequency (UHF) bands. The technology makes communication easier and secure despite testing rural conditions.
In the words of the senior director of Microsoft Airband Initiative, Paul Garnett, "Our work with Redline will increase the availability of competitively priced TV White Space technology, enabling internet service providers (ISPs) to provide access to customers at an affordable price point."
In fact, per a MarketsandMarkets report, the global TVWS spectrum market was is envisioned to witness a CAGR of whopping 74.3% to reach approximately $53.1 million by 2022 from $1.2 million in 2015.
As a result, the partnership to deliver broadband connections powered by TVWS tech bodes well in the longer haul.
What the Investors Need to Know?
Shares of the company were down 2.1%, yesterday. However, Microsoft stock has returned 33.5% year to date, outperforming the industry’s rally of 27.5%.
This outperformance can primarily be attributed to its rapidly expanding efforts in artificial intelligence (AI) and Internet of Things (IoT) based developments. Undisturbed focus on Azure remains a key catalyst.
The 21st century is basically governed by the internet and consequently the access to this service forms the very basis of this world. However, per World Internet Users data, only 54.4% of world’s population availed internet services in 2017. The partnership is a step in the direction of bridging this immense gap by providing affordable broadband connectivity.
In an effort to expand penetration into smaller markets at different levels, increasing participation of rural population in the digital economy becomes a necessity. Moreover, per Boston Consulting Group data, a robust cost-effective connectivity model can be developed by leveraging TVWS tech combined with other technologies.
In this era of digitization, where more and more people are utilizing internet services for their respective purposes, the partnership with Redline to add Virtual Fiber radio technology capabilities holds promise.
The rural pockets bereft of internet connectivity can benefit a great deal from the solution. Consequently, businesses including the likes of education, agriculture and telemedicine, can develop and prosper.
The aforementioned factors will aid Microsoft in expanding market reach and exploring emerging ventures, eventually uplifting the economy.
Zacks Rank & Key Picks
Microsoft currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the same industry are Salesforce.com Inc (CRM - Free Report) ,Aspen Technology, Inc. (AZPN - Free Report) and Bottomline Technologies, Inc. (EPAY - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The projected long-term earnings growth rate for Salesforce, AspenTech and Bottomline are 25%, 16.5% and 12%, respectively.
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