SEMO.net: Showing That Competition Works

Since 1995, a company has grown in Poplar Bluff, Missouri. In an area the telcos claim cannot be served profitably, the company provides dialup, DSL, cable, fixed wireless, Web design, WLAN consulting, and webhosting.

by Alex Goldman ISP-Planet Associate Editor [March 13, 2003]

Pop quiz! What's the second largest city in Southeast Missouri? Give up? It's Poplar Bluff, of course! Seriously, while you may not have heard of Poplar Bluff, it is a town of 16,651, roughly equidistant from St. Louis and Memphis, and home to SEMO.net (SEMO stands for Southeastern Missouri).

Founded as Poplar Bluff Internet in 1995, the company has grown organically but rapidly, expanding into wireless, webhosting, design, and even cable and DSL, while also rolling out a panoply of value-added services for its customers. The company is owned by Brian Becker, its president; Eric Arnold, its vice president; Jerry Aldrich; and James Becker.

Becker, the company president and majority owner, says that his life is guided by religion, but that he does not discuss it unless asked. He says, "I have a very deep faith in Jesus as the Creator of the Universe. But unless someone asks (as you have) I would rather my life be an indication of my faith rather than my words, so I don't talk about my faith unless people are drawn to me with questions about it."

He says his work is guided by the New Testament precept, "Do unto others as you would have them do unto you." However, he adds wryly, "Only our employees, competitors, and vendors can answer whether management actually comes close to that moving target."

His company currently claims 15,000 subscribers, which would make it small, except that about 3,000 of those subscribers are businesses, making it larger than it would otherwise appear. It has 40 full time employees.

Although it provides other services, the company derives 85 percent of its income from narrowband services. The company offers service at $21.95 per month, reducing the price to $19.95 if the user allows SEMO.net to draw the bill directly from the bank, and reducing the price further to $17.95 if the user signs a two year agreement (which is still billed monthly).

The company grew organically and conservatively, building its own network, and buying equipment instead of leasing it as a rule. Notes Timothy Hicks, director of marketing, "We saw that neighboring towns needed Internet access too, and that the big ISPs were ignoring these communities. As our user base grew, we changed our name."

An unusual opportunity came when the municipal government of Poplar Bluff sold a bond to purchase a cable system. SEMO.net obtained access to provide Internet services over the municipal cable system in an open agreement that would allow other ISPs access as well. "The municipal government doesn't want to compete with taxpaying businesses," explains Hicks.

With a webhosting data center connected to two DS3 lines, SEMO.net may have the largest pipe in the area. Hicks claims his users experience the benefits, surfing at faster rates than any other local ISP can offer. It uses two backbone providers: AT&T and SBIS. It works with three large ILECs: SBC, ALLTEL, and CenturyTel; and two tiny ILECs: BPS Telephone (which serves three towns) and Ellington Telephone (which serves the town of Ellington, population 1,045).

The company also provides Web design and WLAN consulting services to business customers.

The company's hosting clients include the local entertainment coliseum, the local chamber of commerce, a Christian music site called Wise Men Promotions, and, usefully enough, a local pest control service, Jackson Termite & Pest Control LLC.

In a religious and conservative area, the company offers family safe Internet access to its customers, built around the R2000 Internet Filtering Server from 8e6 Technologies. Users dial up through an L2TP tunnel to a Cisco router that sits behind the R2000. The company lists four filtering options on its rules page, but many more are potentially available.

The company offers 500 MB of personal data backup for $7.95 per month, with a $19.95 setup fee, offering additional space at $10 per month per GB. A customer installs software that will automatically connect to the backup server in the middle of the night and upload any new or changed files in "My Documents" or any other specified folders. A "personal CD recovery" service is available for $24.95 per CD, where the data is backed up to a CD (with the caveat that each CD can, of course, only hold up to 640 MB).

Besides cable broadband, the company also offers fixed wireless, DSL, and ISDN. The company sells wireless at $44.95 per month for 256 Kbps or $49.95 for 512 Kbps; and offers cable at $29.95 for 256 Kbps or $34.95 for 512 Kbps. The company charges higher rates to businesses with several computers. It has a few dozen DSL subscribers through an ILEC that operates in three towns.

The company offers dialup roaming via a toll-free number for $0.085 per minute, but does not advertise the service because it is not very profitable. The service is offered as a courtesy to existing subscribers and is not intended to be a revenue generator on its own.

The company's Web portal offers information on local business, weather, sports, and entertainment.

Having already had success selling Postini anti-virus and anti-spam to its customers, the company is now selling the RedV PopUpProtector as well.

Brian Becker says that he relies on best-of-breed equipment. All routers are from Cisco, all Remote Access Services (RAS) is by CommWorks Total Control, and all fixed wireless equipment is from Alvarion. The company's VPN uses Symantec and Cisco implementations.

The only dark cloud on the horizon is that SBC, the local RBOC, is attempting to obtain monopoly rights in the state of Missouri and is lobbying the state to pass a bill that would achieve those ends. A coalition has formed, and has built the Show Me Competition site (Missouri is the "Show Me" state). As of publication, the Bell's bill had been stalled in the state senate but had passed the state house. SEMO.net is in a tough business, where a stroke of the deregulatory pen could erase one of the oldest ISPs in the U.S., but it intends to persevere.

In fact, the ISP is looking to make acquisitions within its service area without taking on debt. "We plan to manage growth to avoid outstripping the growth in network costs," says Becker.

—End