Fixed Wireless Business

ISPCON WISP CEO Session, Spring 2004

WISP CEOs gathered at the ISPCON WISP CEO session, sharing lessons applicable to WISPs of all sizes.

by Alex Goldman ISP-Planet Managing Editor [April 20, 2004]

At the ISPCON WISP CEO session, moderated by Tim Sanders, founder and president of The Final Mile, each panelist gave a short talk about their business, introducing themselves.

Eden Recor, owner of Grand Lake, Colo.-based Grand County Internet Services (see ISP-Planet's profile here), talked about the lessons his business has learned.

He said that when he started offering wireless broadband, he charged a $600 install fee and $50 per month. He eventually switched to a $300 install fee, but the customer does not own the equipment. He calculates that he has to replace the equipment every three years.

One key business relationship is with a contractor. Recor pays the contractor $200 per install, and allows the contractor to charge extra to set up a home network, which is something some customers are pleased to pay for.

He parenthetically noted that a neighbor and competitor, who has gone through five wireless systems in five years from five different vendors, taught him a lot, for free.

Recor said his only broadband competition is satellite, and Verizon's "high speed" wireless service that costs $80 per month.

Recor said that you want to provide service that your customers will be able to use, even if they use the service for business. "I have customers, like one stock broker, who are afraid they'll get charged more if they tell me what they do. I don't do that."

Qwest has not been helpful. "I started with a single T-1 line. I ordered Qwest ATM service one and a half years ago, and I'm about to get it now."

He says that on any installation, he reaches the break even point after 18 months. The dialup part of the business is profitable; the company is constantly reinvesting money in wireless.

Business wireless
Tom DeReggi, president of Germantown, Md.-based Rapid DSL and Wireless, inc., said that his main lesson, in building an urban and suburban wireless network, is that you do have to build to get customers.

The company is not new. It had been a LAN systems company in 1994, started offering DSL in 1996, and started working with wireless in 2001. Initially, the company's build out was conservative, sector by sector. But that was not the best way to do it.

When you build, DeReggi, said, simply use realistic take rate numbers. "Use one percent or two percent or ten percent, depending on your market. But don't assume 100 percent will take your service. As soon as we built our network out, we started closing deals fast."

Of course, to build an urban business network, you need money. "Wireless is right for every market," said DeReggi. "Rural markets can use omni antennas, but the urban market requires a higher level of service. You cannot go down for one hour. Also, you have to be prepared for competition."

DeReggi said that after the initial buildout, the punishing costs were not equipment costs, but staff, roof rights, and transit.

A rural pioneer
Marlon Schafer, principal of Odessa, Wash.-based WISP Odessa Office Equipment, and a consultant, said that his WISP is still primarily a dialup provider (see Schafer's ISP-Planet articles here).

The company provided DSL "back in the Pairgain days" but the RBOC forced him to switch to wireless by making DSL too expensive.

Schafer learned that he must charge for excessive usage. The baseline user is dialup, which averages 110 MB per month per user (peaking at 2 GB). The first GB for wireless users is free, the next is $5, the next $10, and so on. The fee is not collected the first time, and it serves as a warning. Schafer has never collected, because nobody has ever gone over the limit twice.

The company charges a $300 install fee, and the user owns the equipment. Schafer charges $35 per month, which is what the market can bear, as there is DSL and sometimes even fiber competition.

On access point locations, Schafer signs a non-exclusive location agreement, but subsequent companies have to agree to not interfere with his equipment. He also has 180 days to find a new location, if asked to vacate a location he's renting. End users have a five year contract, automatically renewable, and can only cancel in writing, with 60 days notice.

The first WISP
The first WISP in the world was probably Laramie, Wyo.-based nonprofit WISP LARIAT. The company started providing 2 Mbps service in 1991, using equipment from Dayton, Ohio-based National Cash Register (NCR). Glass says that his story is Darwinian. Darwin did not say that the fittest survive, but that those who fit best in their niche survive.

His niche is a small town, dominated by the local college, and the college users all have free dialup. He also competes with Qwest, which markets a deceptively cheap $26.99 per month DSL plan, excluding costs described as regulatory fees but determined by the RBOC and retained by it. "We draw up a business plan, and tear it up every nine months," he said.

"Cable's just entered the market, trumpeting their 3 Mbps service. WISPs have to not get trampled by the two elephants fighting."

He said that since the state of Wyoming taxes equipment used in a business, it became clear that he had to sell equipment that students could take with them. That forces the WISP to use the cheapest, most generic equipment available, and use proprietary software to compensate for the weaknesses of the equipment.

And with all of those problems, a WISP competitor has just appeared, "polluting the airwaves."

Open discussion
All WISP CEOs agreed that billing is important. DeReggi said that the perfect solution does not exist. Only Glass does not use Quickbooks at all.

Glass said that billing automation makes it possible to keep the WISP a husband and wife shop. "You're not a bookkeeper, so you shouldn't spend your life as one."

Schafer concluded that the hotspot model may be more attractive to new WISPs. "If I started again today, I would build the system out as a series of hotspots, and have my customers bill themselves."

—End