AirTouch Technology Aims To Rattle The Telecommunications Industry

Some of the greatest investments over the past decade, particularly in the telecommunications sector, have derived from companies delivering new innovative technology products that completely alter the way in which mainstream consumers interact.

Of course the obvious example is Apple (NASDAQ:AAPL), which revolutionized the smartphone with the release of the iPhone. In 2007, magicJack (NASDAQ:CALL) shook the foundation of landline communication industry when it introduced a market disrupting device for making free calls.

One very young company that could be following a similar path in this way is AirTouch Communications (OTCPK:ATCH). AirTouch makes products that "bridge the final mile" of cellular communication service through devices that safely amplify cellular signal throughout a home or office. They also provide a sort of interface between mobile and landline communications. Their newest SmartLinX product enables users to ditch cordless handsets and instead use one phone, such as an iPhone, for both landline and mobile phone calls. In this way, customers can keep the features of their smartphone, such as the contacts list, while making or receiving calls through the clarity of the landline.

AirTouch recently clinched a deal with TelMex (TELMEXL.MX) for the purchase of 2,000 AirTouch SmartLinX product units, with intent to purchase an additional 18,000 more. These will be rolled out in Mexico, followed later throughout Latin America. This deal is a critical turning point in the AirTouch story.

For one, a purchase order of this size will likely generate revenues far beyond what the company has previously secured for its communications devices, perhaps alone doubling revenues year over year.

But more importantly, this large purchase lends credibility to AirTouch technology. TelMex is the dominant landline company in Mexico, which boasts a market cap well north of $100 billion. The company has invested time, resources, and money into the development and deployment of SmartLinX. TelMex sees the product as a way to hold on to its landline customers, which are leaving in droves for reliance on cellular services.

In fact, the TelMex's Executive VP for corporate Development foresees SmartLinX U250 eventually "…replacing cordless phones among a large portion of our broadband and Wi-Fi network customers." The relatively large purchase and investment by TelMex indicate that a real market for AirTouch products exists.

However, the real story here is in the future patented technologies AirTouch plans to offer. When this technology is fully developed, customers of AirTouch technologies will have an advantage over their regular cellular and landline counterparts. For example, a user in a coffee shop in Paris can connect to their SmartLinX unit sitting in the US through a WiFi network with their smartphone. He or she could then make phone calls through their landline service for free, or at least cheaper than international calling through a mobile carrier. They can also make completely free calls to any phone linked to the SmartLinX device. This enables SmartLinX users to make free phone calls over their existing smartphone, all while bypassing their mobile carrier and saving mobile minutes.

AirTouch would be paid through the hardware at the time of purchase. But for recurring revenues, customers would likely pay a monthly service fee, much like for call waiting and caller ID. This is key for an investment in AirTouch, as it demonstrates the potential for growth and revenues far beyond a simple hardware play.

Other major telecom players have already taken note. In fact, in the recent AirTouch conference call, the company noted that China Telecom and China Unicom have requested that the patent-pending SmartLinX technology be embedded into routers, creating so called "super routers". With customers already lining up, AirTouch engineers are currently working to make this possible, and upon doing so, will open up a very massive opportunity in which AirTouch's SmartLinX technology would be licensed out to router manufacturers.

Currently, well over 1.5 million routers are sold per month in China. Clearly AirTouch is on the brink of a major opportunity. Having SmartLinX technology embedded into even a faction of these routers would rapidly lead to many new customers - and a serious influx of cash - at very little cost.

Like magicJack and others, AirTouch's patented technology could be very disruptive in the telecommunications market, both by bridging mobile and landline services as well as enabling customers to bypass mobile carriers while making calls across the globe, in many cases for free. It is these types of groundbreaking inventions that have led to explosive growth among technology companies in the past. Investors should keep an eye on this emerging company in the coming year as it moves to dominate its niche and rattle the telecommunications industry across the globe.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.