MIDDLETOWN – Shares of broadband provider Towerstream Corp. have jumped more than 30 percent over the last week after an influential investor suggested AT&T Inc. may start paying the company to provide a Wi-Fi network for its subscribers.

Michael Murphy, who writes the newsletter New World Investor and is a contributor to MarketWatch, laid out the case to his readers last Thursday. (He is a Towerstream investor and recommends buying the shares.)

During a conference call with investors last month, Towerstream CEO Jeff Thompson said the company had spent the last four months building a trial Wi-Fi network in New York City.

Although Thompson did not name specific companies, he said Towerstream hopes to get major wireless providers such as AT&T to pay to use the Wi-Fi network to meet growing demand for data from devices like Apple Inc.’s iPhone and iPad and smartphones that run Google Inc.’s Android operating system.

“As the number of smartphones in the market increase, we believe that traditional wireless carriers will look for alternatives to meet capacity needs as demand for high-bandwidth content like video increases,” Thompson said.

It is well known that AT&T has been having trouble keeping up with its customers’ demands for wireless service since the iPhone was introduced in 2007, particularly in metropolitan areas like New York and San Francisco. One way to deal with that is to get more subscribers to connect to the Internet using Wi-Fi hot spots rather than AT&T’s 3G mobile network.

During initial tests, Towerstream’s Manhattan Wi-Fi network processed about a terabyte of data per day, Thompson said. “It took Towerstream years as a company to get these data rates, and only days for this new trial network,” he said.

That led Murphy to speculate that Thompson was alluding to “a Wi-Fi network that cleverly leverages the rooftop real estate Towerstream has locked up under long-term leases. Instead of ground-level coffee shop hotspots, Towerstream is putting Wi-Fi high in the air and on steroids.”

“And,” Murphy added, “I think AT&T is the first potential customer.”

Last week, AT&T began offering free public Wi-Fi hot spots in Times Square to its wireless and broadband subscribers, CNET reported. As Murphy pointed out, Towerstream has a major antenna installation in the same place.

On top of that, CNET’s story quoted none other than Towerstream’s Thompson as an expert source to explain that Wi-Fi networks can now extend nearly 2,000 feet, almost as far as some cell towers reach, making them a powerful alternative pathway to the Web. In a related blog post last month, Thompson showed off the company’s installation atop the Empire State Building.

A spokesman for Towerstream told Providence Business News the company “does not comment on rumors.” AT&T declined to comment.

As of April, Towerstream provided wireless broadband service to roughly 1,900 business customers in New York, Boston, Chicago, Los Angeles, San Francisco, Seattle, Miami, Dallas-Fort Worth, Philadelphia, Nashville, Providence and Newport.

Murphy said he thinks providing Wi-Fi hotspots for AT&T and other traditional carriers “is going to become a major revenue and profits generator for Towerstream.” He suggested the stock could triple to $6 a share this year and hit $16 during 2012.

Towerstream rose 1.1 percent, or 2 cents, to $1.82 a share in Nasdaq trading at 3:02 p.m. Monday. The stock has gained 35 percent since closing at $1.47 on May 25. It is down 12 percent since the beginning of this year.

Additional information is available at towerstream.com.

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