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XOHO (OTC:XOHO), arguably the most undervalued telecom company, is in such an industry that no one wants to enter. Many resources, including some longhaul networks and the fixed wireless spectrum in Local Multipoint Distribution Service, are shut down or abandoned for the only purpose of eliminating competitions in the consolidation process, which is still going on.

The situation has gotten so bad that there is seemingly no way things could get worse; thus any news would be good news. In that sense, XO is not only the most undervalued stock, but it is also, ironically, the safest investment. Nevertheless, even as most connectivity options get faster and cheaper, linking cross-town--or even cross-campus--locations remains a budget buster. Is today's fixed wireless the answer? If you've ever had to link multiple local buildings, you know the budgetary pain interconnection fees can inflict--you may pay tens of thousands of dollars per month just to span a few miles.

There's got to be a better way, right? If you're lucky, you can take advantage of new options like metro Ethernet. If you're really lucky, the city or county will provide right-of-way access to run fiber. But let's face it: Most of us have to make our own luck. Enter today's fixed-wireless systems. Having attractive ROI this low-profile technology (fixed wireless) is growing at a decent clip: The point-to-point wireless market is expected to reach $7 billion by 2009, up from $4 billion in 2004, according to the the analyst group Visant Strategies.

XO is the largest owner of LMDS spectrum, currently worth $35.8 million, in the nation. NextLink, the wireless operation of XOHO, recently launched its broadband wireless services in Las Vegas and increased its wireless portfolio to 14 markets at the speed of covering 1 to 2 metro areas/month: Washington DC, Boston, Atlanta, Tampa, Miami, Nashville, Chicago, Kansas City, Dallas/Ft. Worth, Huston, LA, Seattle, Phoenix, Las Vegas – already more than its almost only competitor in LMDS fixed wireless services, FiberTower (NASDAQ:FTWR). The remaining large LMDS spectrum owner, Level 3 (NYSE:LVLT), through its acquisition of Telecove, has so far no plan to use the spectrum, which may expire and become invalid if it is unutilized for certain time period. When XO/Nextlink expands fixed wireless service and launch broadband wireless services and cellphone backhaul services in new areas, SIZE MATTERS.

The support of XO Communications’ network footprint include over one million fiber miles, 3,000+ on-network buildings, 950+ central office co-locations and media gateways serving over 75 major metropolitan markets connected by a new Infinera-equipped 18,000 mile next generation nationwide Inter-City fiber optics network across the United States, as well as its direct sales force and over 500 third party national, regional and local agents and agency firms, the cross-selling and up-selling opportunity becomes overwhelming. The savings in XO’s operational expenses are also attractive. Further, the investment required for hubs constructions would be minimal. The mere additional equipment needed is the radio customer premises equipment [CPE], only when the contract is signed - with zero risk. That’s the beauty of wireless. If I were an investor of FiberTower, which claims $16.66 million revenue and close to $630 million market cap - about 80% of XOHO.ob (with $1.4 billion revenue), I'd be a little worried.

Disclosure: Author has a long position in XOHO.OB

XOHO 1-yr chart