Fixed Wireless: A Method
For Broadband Internet Access Part 2:
Business Basics

If you're determined to build a successful fixed wireless Internet program, it's a good idea to test the financial integrity of your new services to make sure that your decision is financially sound.

by Allen D. Marsalis President, ShreveNet and Bob Moldashel President, Lakeland Communications [January 31, 2001]

For those that don't enjoy spreadsheet-laden tasks, you may want to think of a business plan as the first step in building your fixed wireless Internet service. Besides, if you don't like managing details, chances are you won't enjoy the fixed wireless side of your business. Running a fixed wireless ISP means that you'll have to plan and design detailed IP networks and make accurate RF calculations—detailed spreadsheets simplify these tasks, too.

Because each element of building your fixed wireless ISP is critical, you need to draft your business plan just as carefully as you would climb a tall tower on a windy day or test a new antenna in the rain. Take the time to put your business plan on paper—doing so will reveal several important questions that you might not have considered all the way through to fruition.

The fundamental equation
It's essential that you craft a business plan in order to address one pertinent question—can you make money operating a fixed wireless ISP? Certainly, potential profits from building a fixed wireless ISP appear to be much brighter than wire-line counterparts.

But no business can afford to grant itself limitless financial reserves and attempt to operate without fiscal boundaries. In order to build an accurate business plan, you'll need to take a long-view of financing your fixed wireless venture over the long haul.

About fixed expenses
Because I've never won the lottery or sold a dot-com venture for $100 million, I needed to fund my fixed wireless start-up with real money, so my business plan began with a look at fixed expenses.

It's easy to create a worksheet that will beat at the heart of your business plan—fixed expenses and monthly recurring expenses in one view, projected revenues in another—but accurately researching and assembling all the data required takes a great deal of time and effort.

In order to calculate your fixed expenses, you must first determine which equipment you will purchase at what price and account for what it will cost to put the gear where it belongs.

For example, if you are building 3-sector Wireless Point-of-Presence (above) you will need to consider the following equipment costs for setting up your WPoP:

• Tower construction, if applicable
• Misc. supplies: water proofing supplies, enclosures, UPS, etc.
• Ladder, and tools for installations
• Contingency Allowance: Ten to 20 percent, as much as you can afford

If you are not already operating a wire-based ISP, there are several other hefty costs to consider:

• Router/CSU/DSU
• UPS Power Backup
• Web and Email Servers
• Billing and Accounting System
• Other: (A long list of hardware, software and staffing expenses that go beyond the scope of this article.)

Fixed expenses are always one-time expenditures incurred during the month you paid for the gear. However, your fixed expenditures could be considered recurring expenses if you funded your purchases with money from a lender or opted to lease equipment from a wholesaler.

Site access is a slippery figure when it comes to determining cost estimates for your WPoP business plan. Expenditures vary, depending on whether you're constructing a tower or renting space on an existing facility.

If you've already made the decision to go wireless, then you probably have an access point in mind, so it's easy to determine your recurring expense for site access. If this is not the case, then you've got some research to do before you can account for tower expenses in your business plan.

If you decide to build a tower, some expenses will be fixed, while other aspects of the build might be recurring expenses. For example, construction supplies are fixed expenses, but monthly payments on a loan that funded your project are recurring expenses.

If you rent tower space, then the expense will be recurring—but there might be a one-time set-up fee involved that should be factored into your fixed expenses.

You get the idea—buying, leasing, or borrowing will dramatically effect which type of expense you incur—fixed or recurring—but more importantly, it will also determine how you project your earnings.

A few thoughts on recurring expenses
Like any business, your fixed wireless ISPs profitability is determined by subtracting recurring expenses from total monthly revenue. Not too many business ventures make a profit in the first few months of operations, so it's important to know how long you must subsist on peanut butter and jelly sandwiches—before you can budget supping on sushi.

What constitutes as a monthly recurring expense for your fixed wireless ISP? Here are just a few examples:

• Any leases payments for equipment
• All loan payments for tower construction or utility pole rent
• Any supporting telecom services, such as backhaul circuits
• On-site installation fees, including support personnel
• Vehicle lease or loan payments
• Postage and billing supplies
• LEC monthly fee allotments

Once again, more expenses will be incurred if you are not already operating an ISP, for example:

• Telephone voice and fax lines
• Toll-free numbers for technical support and sales
• Personnel to staff technical support, sales, network administration, and back office functions
• Backbone bandwidth
• Usenet services, news feeds, or other content alliances

Recurring expenses should be listed as rows on your spreadsheet, while the columns should contain the months of each year, for a two-year minimum. Begin with the first month and extend your projections forward 24- to 48-months. If the cost factors change, you can always go back and refine your business plan, later.

Go to page 2: Projecting Revenues