Fixed Wireless Business

KeyOn

A regional WISP works partnerships, acquisitions, and financing into a growing business.

by Gerry Blackwell [April 7, 2006]

A lot of rural and small town WISPs are mom and pop operations with no ambition beyond serving their local communities, and no ability to do more. There's nothing wrong with that, but Las Vegas-based KeyOn Communications Inc., which already serves six markets in Nevada, Iowa, Idaho, and Colorado and is currently on a growth spurt, aims to be much more. President and CEO Jonathan Snyder believes KeyOn has what it takes to be a major regional player.

The company began in 2003, building an 802.11-based access network to serve parts of Las Vegas. All of its expansion since has been out into small town and rural markets, at first near Vegas, then further afield. Today it serves a population base of about two million and has more than 6,500 subscribers, most residential, but about 15 percent business. Besides Las Vegas, it's in nearby Pahrump in Nevada, in Pocatello and Idaho Falls in Idaho, in southern Iowa around Centerville and, most recently, western Colorado, which it serves from a base in Grand Junction.

Feeling expansive
Last year, the company expanded, opening three new markets, and grew its subscriber base in existing service areas. It also made its first acquisition: SIRIS (Southern Iowa Regional Internet Services), a former subsidiary of the local water board that was already in 17 communities across Iowa. "Our individual markets are growing great," Snyder says today. "And we're going to launch more markets this year."

He won't say where exactly or when. It depends on "a couple of strategic initiatives" the company is working on, including a second acquisition. Snyder is also guarded about how many subscribers the company might be serving by the end of the year. "It could be a very robust number, assuming we close on this acquisition," he says. "We don't want to tip our hand, though—it's a small industry. Let's just say it will be a significant increase over where we are today."

The company is funded privately by angel investors. It also relies on Agility Solutions, a leasing company that has made a specialty of WISPs, to spread out the capital costs on customer premises equipment. "Institutional money hasn't really figured out this industry yet," Snyder says. "We're here because we've got some great investors who have seen what we're doing and liked it, and have seen results. They've put fairly significant sums into our business." One result his investors like is the fact that the company is operationally profitable—though still some ways from break-even.

Snyder is optimistic about the company's ability to continue to grow in part, he says, because it has superior technology and network management know-how. "We know how to operate networks," he says. "In the evolution of this industry, a lot of Mom and Pop operations have been trying to provide services. I don't mean Mom and Pop in any pejorative sense, but what they lack is centralized intelligence to manage a lot of customers. Our system will scale to several tens of thousands of customers."

Proprietary components for differentiation
While the KeyOn network is mainly standards-based Wi-Fi, a few proprietary components make it more scalable than most and help the company manage more efficiently than most. It uses a cellular-like architecture, not mesh. Base stations, each with sectorized 360-degree coverage, consist of four Wi-Fi access points, mainly from Cisco Systems, and antenna arrays. None covers a radius of more than three miles.

Software on the base stations interacts with software at the customer premises equipment, allowing technicians at the company's Las Vegas data center to communicate with and troubleshoot individual subscribers. "That allows us to run a very scalable operation," Snyder says. "We have more than 6,000 customers, but they're managed by only 30 employees. I think that's pretty remarkable." Some markets are managed by one person locally. Yet KeyOn can still guarantee fast provisioning of service and trouble response.

Another key component is the customer premises equipment. When Snyder was first getting KeyOn going, he purchased the assets of a software company with a proprietary program that helps manage traffic between a customer and the nearest base station. KeyOn now installs that program in firmware on its outdoor client premises box—a custom enclosure with antenna, single-board computer and 802.11b and g chipsets. "The customer premises software manages the reliability of that relationship between the customer and the base station," Snyder explains. "It means we can put a lot more customers on that sector, even on unlicensed 802.11 networks."

Cost per customer for the CPE is already down to less than $200. Component prices are still dropping and the company is exploring volume assembly offshore to further reduce costs—although Snyder is loath to commit to large volumes yet until he sees how far further costs might come down.

KeyOn base stations are in some cases co-located with hubs where the network connects to a fiber link to the Internet. In other cases, traffic is backhauled via high-capacity licensed wireless links between base stations and hubs.

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