Fixed Wireless Business

Grand County Internet Services

Launching fixed wireless broadband has been an adventure for Eden Recor, president and owner of Grand County Internet Services, in the mountains near Denver.

by Gerry Blackwell [October 21, 2003]

Life as a small ISP in rural America isn't always easy, especially when customers start demanding high-speed service. Giving them what they want is sometimes easier said than done.

Just ask Eden Recor, president and owner of Grand County Internet Services Inc., southwest of Denver in Colorado near Rocky Mountain National Park. Not that Recor is complaining—he's busy and he's not doing too badly, all things considered.

But launching fixed wireless broadband service in this hilly, sparsely populated country has been, well, an adventure. It started two years ago.

"We had a lot of customers asking for broadband," Recor recalls. "We knew the big boys [AOL, Earthlink] were coming [to provide service in Grand County]. My nearest competitor was starting to offer high speed services. Any ISP now has to be into a high-speed solution."

Recor came to ISPCON that year and started asking other small ISPs about what they were doing. The answer was almost unanimous: fixed wireless. Given the absence of other means of offering high-speed service in the wide open spaces of a place like Grand County, it was the only way.

Frequency hopping would reduce the chance of interference from other service providers—and he knew his competitor was already using DSSS technology. FH was also generally considered more secure than 2.4 GHz DSSS.

That at least made vendor selection easier. It narrowed it down to Alvarion (formerly BreezeCom), the Israeli based company that claims to be the largest pure-play provider of wireless broadband networking equipment in the world.

Recor and an associate—a local contractor who also ran a computer store—went off and took training from Alvarion. They came back and did site surveys, negotiated roof rights, and Recor started buying radios—BreezeACCESS IIs—and installing them with his contractor partner.

He was able to find relatively inexpensive antenna sites—mostly on commercial or residential buildings sited above major population centers, though one is in a clock tower in Winter Park. At some sites, the only payment was free broadband service.

For relatively deep-pocketed ISPs in more densely populated parts of the country, a solution as inexpensive as fixed wireless is a tenable economic proposition. Grand County, though, is a huge, under populated tract taking in thousands of square miles.

There are six major towns of one or two thousand each—places like Winter Park, Grand Lake, Granby, Kremmling, and Hot Sulphur Springs—and one smaller town. In the whole county, there are only 10,000 homes, of which 6,000 are outside the towns, many of them "in the woods," as Recor puts it.

Still, by 2001 he had built up a nice little dial-up ISP business with about 1,900 customers. That was just enough. "I always said I'd be a one-man ISP," he says. "That's why I'm still in business. With 2,000 customers, you can support one or maybe two guys."

Capital expenditures
It's not enough, though, to comfortably fund what, given his means, is a very capital-intensive project. Each wireless POP cost him a little under $4,000 installed. He has installed six so far, including one at his own rural home.

He has more recently installed two rebroadcast sites as well to extend the reach of his network.

Recor is also spending $350 to $400 a month to get T-1 lines to the antenna sites, and another $250 to $300 per antenna site for bandwidth from his main POP to the Internet backbone. As he notes, you have to start paying those monthly fees before the revenue from wireless customers starts.

And he admits it started slowly for him. For the first year, he was only signing up about five new customers a month. Recor puts this down to a combination of factors.

In some areas his local competitor had beat him to the punch—albeit with an inferior service, he says.

Frequency hopping fixed wireless access was also being tarred with the same brush as other wireless technologies making headlines at the time for being highly insecure. Prospective business customers—50 percent of his clientele —shied away.

Finally, the upfront equipment costs for customers—close to $1,000—were a definite barrier.

The slow take wasn't the only hurdle Recor had to overcome. Provisioning T-1s to his antenna sites, even the ones in towns, was difficult at first. The big telecom providers—principally Qwest—can't afford to invest too much in such a small, thinly spread population. That situation has eased somewhat more recently.

Backhaul to the Internet backbone is still a problem, though. Recor would like to consolidate with an ATM circuit from his main POP, but can't get it where he is. "I may wait forever," he says.

Even if more customers had wanted the service, Recor and his contractor would have been hard pressed to install many more than they did. "There's nine months when we're in the middle of blizzards here," he notes. "It's not like in the city. Installing out here in the winter is a lot harder."

To make matters worse, his contractor went out of business and pulled out of their partnership. "He told me right as I was getting really busy," Recor recalls. "He said he didn't have time and he didn't want to do it anymore."

He found another technician who had lost his job and was happy to do the work—until he got another job. Now Recor is trying to lure him into leaving the new job and setting up as a contractor to do Grand County Internet's wireless installation work—and take a cut of new businesses Recor is contemplating, including offering satellite and Wi-Fi hotspot services.

This year, despite the labor problems, Recor is turning the corner with his wireless service. Although he figures he needs another five access points to cover the territory properly, the new rebroadcast points have extended coverage to all the towns in the county plus a significant chunk of the rural areas. So his market universe has increased.

Another key was offering customers leasing terms. In the beginning he was charging $900 upfront to cover his costs for the Alvarion client equipment, plus $30 a month for a minimum 128 Kbps service—which was less on a monthly basis than his competitor.

(The service in fact delivers up to the full T-1 capacity. The unthrottled bandwidth is a special deal for "early adopters," though, he explains. He will begin to throttle it back now that more customers are coming on.)

Recor introduced a three-year lease-to-buy deal that reduced the upfront investment for the customer to $300, but increased monthly fees to $50. "That incereased the take rate quite a bit," he says.

The day we spoke to him, Recor had just decided to go the next step and also offer a no-contract rental plan under which customers would pay a little more up front, but not be committed for as long.

He recently began to promote the service more, which has generated new demand. In fact, he's now at a point that he can't keep up with demand—mainly because of the labor problems. He's currently managing to bring on ten new customers a month, but would like to see that go to 20 or even 40.

He's begun to take customers from his competitor too—in some cases simply because the competitor doesn't offer high-speed service in a particular area, but in others because the competitor has had service problems, Recor says.

Despite the difficulties he has faced in launching the wireless service, Recor has no regrets. With 80 customers, he is already at the operational break-even point in some of his wireless service areas—though he's still paying back the capital investments.

"I didn't go into this blind," he says. "I spread-sheeted it all out. I saw that it would be two years before I'd see a trickle of profit. I can live with that. If I had a lot more money backing me I could probably do it a lot faster, but I can live with that."

He has learned some lessons that other small ISPs should heed, he says.

It never happens as fast as you want, Recor cautions. Also, don't count on upstream providers to be able to deliver the services you need when you need them. And it's more capital intensive than it might at first appear.

Still, on the whole, he's not dissatisfied. It's a subsistence business, but successful. And Recor gets to live in grand country.

—End