Fixed Wireless Business

CommSPEED Pursues All Profit Paths

Providing a varied portfolio of services, getting SBA funding, staffing with local students, and pioneering the deployment of MMDS technology, CommSPEED is getting all the details right.

by Alex Goldman ISP-Planet Associate Editor [January 31, 2003]

Based in Prescott Valley, Ariz., CommSPEED is an ISP that does a little bit of everything. It offers dialup, wireless broadband, webhosting, LAN and home network consulting, news services, and anything else that its users—both business and residential—will pay for.

Despite big ambitions, the company retains a small business "family" feel, evidenced by the photos in the company's charming photo gallery.

CommSPEED sells wireless broadband access in two service levels. Basic residential service runs at 512 Kbps and costs $39.95 per month; 1024 Kbps service costs $59.95. The company charges more and offers additional services to businesses.

The company partners with a variety of technology providers to enhance its basic Internet service. Critical Path's Supernews, for example, provides Usenet. Mark Davis, CommSPEED vice president and general manager notes, "we do local caching, but it doesn't gain us much in bandwidth savings." He estimates that news costs his company $0.15 per user per month. Anti-spam and anti-virus services come from Postini, and Platypus provides billing.

CommSPEED offers customers 40 MB of web server space with each broadband account. The killer app, Davis says, is eBay. "Almost two-thirds of our users are active on eBay. I promote our free server space offer when I'm selling services. It's a great marketing tool. Many of them put product images on the server, and post links to the image on eBay. eBay charges for images, so active eBay users can save money. The cost is not that significant for us."

The data center has grown rapidly. Mike Shea, CommSPEED's data center manager, remembers the quiet days of—two years ago: "It was just a few of us. Now there are 32 of us. For customers' web sites, such as free pages, we use Microsoft IIS and Windows Advanced Server. For our intraoffice sites and for business customers, we use Free BSD and Apache."

The data center recruits students from the local university, Embry-Riddle Aeronautical University. "They're good students," says Shea. "They're studying subjects like computer science or air frame engineering."

Somewhat to our surprise, folks at CommSPEED said that WLAN consulting is a profitable, viable business that every ISP should consider. Kevin Hoagland, CommSPEED's vice president for market development notes, "it's a profit center and it helps us retain customers. We charge $70 to install a NIC. I always admit that the customer will pay more if they go through us. I say we charge more for three reasons: that I pay a professional installer, that if the product is still under warranty I will repair or replace it, and, finally, that nowhere in our building is there a sign saying that we are a non-profit organization. Customers appreciate the honesty."

Hoagland estimates that his company earned $180,000 in WLAN consulting revenues in a community of 80,000 people.

Building the business with many partners
CommSPEED caught our attention when it received a $1 million loan from the Small Business Administration (SBA). Those loans cost about 2 percent more than the prime rate set by the Federal Reserve, but with interest rates low, many SBA loans currently cost about 6 percent per year, so CommSPEED is probably paying about $60,000 per year ($5,000 per month) for its $1 million loan.

While CommSPEED is a small business with a personal touch, its parent company, Newport News, Va.-based Virginia Communications, is a larger institution that helped CommSPEED with cash and connections.

CommSPEED was founded in October 1999, and received licenses to spectrum already owned by Virginia Communications. Virginia Comm. also put CommSPEED in touch with RF equipment manufacturer Andrew Corporation. Andrew Corp. equipment is used in CommSPEED's backhaul, and forms the backbone of CommSPEED's network.

To bridge the last mile, the company uses Vyyo's MMDS equipment, which, says Hoagland, provides a real-world 7.5 mile radius of service, with near line of sight service. "For example," he notes, "I'm on the other side of a 100 foot hill and I get service."

The company has three hubs and is currently building two more. CommSPEED's customer count—2,600—may sound small, but notes Hoagland, "we think that makes us the largest installed provider of broadband MMDS in the world. And we're adding about 150 customers each month." The company hopes to add another 4,000 subscribers when it completes the two new hubs.

Davis says that a good tower is key to providing good service in their area. "We're not only desert around here. We've got granite boulders and a pine forest, and other challenges as well. You can have greater penetration in areas with fewer hills and tress. If you're not surrounded by trees and you have a tall tower, you can reach many subscribers."

The company has tried a wide variety of technologies and equipment providers, even though it has been in operation for just over three years. "We're not a Cracker Jack company," says Hoagland. "Staying out of the box has made us successful. One piece of advice I'd share with fellow ISP operators is this: Don't fall in love with the technology that's out there today because tomorrow's a completely different game."

CommSPEED is currently using first generation (LOS) technology but is examining second generation (NLOS) technologies. Davis notes, "at the moment, NLOS technology does present a wonderful business case in terms of affordability, and the fact that you don't need an external antenna lowers deployment costs, but it also has the drawback that range, throughput, and capacity are lower. At the moment, with ranges of 6 miles at the most, we think it's great for metropolitan areas, but not for rural areas."

In Prescott Valley, the company owns 13 channels, each of which is 6 MHz in width, and is leasing another 8 channels. That gives the company more space than is available in the entire unlicensed 2.4 GHz band, about 126 MHz of not-necessarily-contiguous spectrum. It has more spectrum than it would have if it used unlicensed bands and also avoids the interference of unlicensed bands by using licensed spectrum.

CommSPEED is expanding beyond its home market, with deployments planned in ten other rural marketplaces across the nation, including eastern Iowa and portions of Tennessee, Kentucky, Pennsylvania, Arizona, and Arkansas. Notes Hoagland, "it's good that our billing system will allow us to have multiple copies in different locations." CommSPEED expects to grow.

—End