Wireless Internet Service Provider (WISP) News

WISP Industry Rollups

It's been quite the quarter for rollups of small Wireless Internet Service Providers into larger Wireless Internet Service Providers, or as I call them "Big WISPs". To wit:

• March 27, 2007 - WisperTel Acquires KLNT Enterprises LLC (d/b/a BroadSpoke)
• March 8, 2007 - WisperTel Acquires Path / Broadband Services, Inc.
• February 23, 2007 - Ohio-based Slane Telcom Acquires WISPs to Satisfy Consumer Demand
• February 19, 2007 - KeyOn Communications Becomes Largest Rural Wireless Broadband Company With Purchase of SpeedNet Services
• January 11, 2007 - ERF Wireless Acquires Seventh Wireless ISP

(All of these stories are at www.biwapressreleases.com, acquisitions category)

It's even more impressive when you consider that these are just the companies that chose to announce their acquisitions with a press release through PR Newswire (the company that I receive most of my press releases from.)

One clear trend... there's investment capital, either from the increasing economies of scale and overall profitability of Big WISPs, or external capital recognizing the opportunity for the next big wave of telecommunications industry rollups or consolidation. Just as happened with small telephone companies, small cable television systems, small wireless telephony companies, small dialup ISPs, small DSL ISPs... small Wireless Internet Service Providers are now being rolled up / consolidated into larger and then larger organizations.

While one reason is that capital is available to do so, another reason is that the technology used by WISPs is finally, reasonably scalable, reliable, and easy to install (and often outsourced to installers who also handle satellite television installations.)

Here's a bit of explanation about what's really different about Big WISPs and "Small" WISPs, from my Fall, 2005 article "What I Learned At WINOG" (in which I mentioned, I'm pleased to note, WisperTel as just such a "Big WISP").

From my observations of the Broadband Wireless Internet Access (BWIA) industry over the last eight years, here are some general characteristics of “Big WISPs” that set them apart from smaller or startup WISPs:

• Big WISPs are well capitalized with bank lines of credit, leasing programs, and favorable terms from vendors and resellers
• Big WISPs have often acquired other ISPs, including dialup and wireless
• Big WISPs typically have more than ten employees, including dedicated administrative personnel and technical support
• Big WISPs use built-to-purpose Broadband Wireless Internet Access equipment from major vendors such as Motorola Canopy and Trango Broadband.
• While Big WISPs use systems from major vendors, they retain the ability to build special systems for special requirements.
• Big WISPs consider managing their network extremely thoroughly to be a core competency, and their resulting reliability of their networks is very high
• Many, but by no means all Big WISPs have active marketing programs to recruit new customers, and regularly engage in proactive Public Relations activity such as Press Releases
• Some Big WISPs have been able to build out their network sufficiently to bypass the need for using Incumbent Local Exchange Carrier (ILEC) – “phone company” connectivity such as T-1 and T-3 circuits.
• Through favorable pricing and performance and good reputation with customers Big WISPs are maintaining and growing their customer base in spite of competition from DSL and cable modem offerings, including recent aggressive low-cost offerings.
• Big WISPs cannot be generalized about market size – they’re found in rural areas, urban areas, and every size of market in between.
• Unlike Broadband Wireless Service Providers, Big WISPs are very price sensitive about their equipment cost. They will spend what they need to spend to insure reliable performance, but they will not spend lavishly, and demand excellent price/performance from the systems they choose to use.
• Big WISPs make extensive and often exclusive use of license-exempt spectrum, often all three ISM bands – 902-928 MHz, 2.4 GHz, and 5.3/5.7/5.8 GHz. Some Big WISPs have begun using licensed spectrum, especially for high-value customers and backbones. Gigabit links are have become sufficiently affordable for Big WISPs.

While the trend to rolling up WISPs is demonstrably accelerating (WisperTel is certainly doing its part), the WISP industry is still highly fragmented and there are many thousands of (small) WISPs scattered across the entire North American continent and throughout the world.  It will take a while to find them all, let alone roll up a significant percentage of them.

WISPs would do well to have a reasonable, provable valuation for their companies ready for when the investors eventually come calling.

By Steve Stroh

This article is Copyright © 2007 by Steve Stroh

WildBlue-1 Launched... Maybe Not So Easy For WISPs To Sell Against Now

On March 20, 2007, WildBlue announced that its new satellite, WildBlue-1 is now partially operational and they are deploying new customers to use it.

Comments by WISPs on some of the mailing lists were universally dismissive. I think that such comments might be misplaced hubris.

One reason is that WildBlue-1 is the first of a generation of satellites that are specifically designed for providing consumer / Small Office / Home Office Satellite-based Broadband Internet Access, not to mention that WildBlue commenced their service with ground station and user equipment designed in the 21st century, not the late 20th. To date, we haven't seen how well WildBlue can really perform because they've been leasing capacity on another company's satellite. My guess is that, using WildBlue-1 and follow-on satellites of the same type, WildBlue will be able to provide "pretty good" Broadband Internet Access... though one cannot beat the inherent latency of an 89,200 mile "packet/ack" round trip (x2 for a data packet to be received).

Another reason is that to date, using leased satellite capacity, WildBlue has been severely constrained on the total number of customers that it can offer service to, so WildBlue hasn't been able to do a "full press" in marketing to rural customers on a national basis. When courting consumers, marketing really, really counts, and the majority of WISPs are not very good at marketing, often only using a phone directory listing, their corporate web page, and word of mouth. Done right, WildBlue could easily conduct a direct mail campaign to all potential rural customers.

One last reason is that WISPs shouldn't be too smug about WildBlue's prospects is, surprisingly, price. WildBlue's service packages start at $50/month. To some consumers with minimal needs for broadband, that might well be an enticing offer.

There are a lot of potential customers for Broadband Internet Access in the US that don't have any alternative to satellite-based Broadband Internet Access. Yes, satellites have been a generally poor alternative in the past, but with WildBlue-1, that may be changing.

By Steve Stroh

This article is Copyright © 2007 by Steve Stroh