WISPs Buck Investment Trends

Unlike other areas of the communications industry, Wireless Internet Service Providers are attracting significant amounts of financing from venture capital private capital investments.

by ISP-Planet Staff [November 12, 2002]

The License Exempt Alliance (LEA) of the Wireless Communication Association (WCA) reports investments in Wireless Internet Service Providers (WISPs) totals more than $445 million since the first of the year.

In the first survey of its type, LEA expects to update the WISP investment report regularly. The total includes investments made in last-mile broadband providers, hot spot operators and aggregators, as well as other commercial users of license exempt spectrum.

Doug Keeney, LEA Chairman and US Wireless Online CEO, took the lead in compiling the data.

"We were surprised not only by the large amount of capital that has flowed into license exempt operators but also by how efficiently this capital has been used," Keeney said.

Keeney noted that one Wireless ISP surveyed makes uses of water towers, grain elevators, commercial buildings and towers for antenna placements to deliver Wi-Fi services to more than 45 communities with populations between 50 and 200,000.

"Wireless ISPs have rolled out broadband service in virtually every state of the union—and in hundreds of rural and metropolitan markets, overcoming a downward trend affecting so many other telecom sectors," Keeney added. "Wireless has boldly become the nation's third pipe for last-mile access—and venture capital obviously sees the opportunity."

Highlights of the report include:

• Investments ranged from a low of $50,000 to a high of $55,000,000
• 18 companies reported backing in excess of $1,000,000
• 34 venture capital firms list investments in WISPs
• Most companies are "last-mile," not short-range Wi-Fi public access
• The large majority of respondents offer both residential and business last-mile service, although some WISPs offered service only to businesses Three companies have been in continuous operation since 1995
• Over half of the WISPs surveyed provide commercial services in major metropolitan markets and successfully compete with DSL and cable modem providers.

WCA President Andrew Kreig said, the numbers in the survey tell us that the wireless ISP is one of Wall Street's best-kept secrets.

"The economies of their operations—combined with this healthy level of backing—point to a bright future for what already is one of the fastest growing segments of telecommunications industry."

Datafor the report was compiled from publicly available sources, including news release from venture capital companies, operators, secondary research reports, and through a confidential survey of LEA member companies.

Organized through WCA, the License Exempt Alliance comprises more than 50 leading carriers plus their vendors who deliver metropolitan area network or mobile/nomadic services, primarily in the 900 MHz, 2.4 GHz or 5 GHz bands. Founded in 1988, the WCA is a non-profit trade association representing the wireless broadband industry.

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