New Kid On The Wi-Fi Block
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You have to take Chirinjeev Kathuria seriously when he starts talking about Agatal, the start-up Wi-Fi service provider he aims to build into "the Sprint of the Wi-Fi world." His plans may sound grandiose at times, but the man has credentials.
Kathuria co-founded and/or built Koshika Telecom Ltd., a digital cellular carrier in India; X-Stream Networks which became the third largest ISP in the UK prior to its merger with Liberty Surf; and Livedoor Group, the fourth largest ISP -- with 1.2 million subscribers -- in Japan.
In North America, where he was schooled (as a physician at Brown and later as an MBA student at Stanford) and now lives near Chicago, Kathuria is best known as the guy who wants to turn space travel into a tourist industry (MirCorp) and as the founder of HealthCite, a consumer healthcare portal he claims gets about two million hits a month, making it the second largest health site on the Web.
Now Kathuria's family-run conglomerate is turning its attention to Wi-Fi where it sees a golden opportunity emerging. "There's so much [cheap] unlit fiber out there and Wi-Fi allows us to go the last mile with no spectrum costs," Kathuria explains.
He has identified several key markets: hospitals, campuses, hotspots, enterprises and residential HDUs (high density units). The company invested about $20 million in developing the Agatal Gateway, a wireless broadband server, and the Agatal network operations center (NOC), which allow it to either build and manage networks on behalf of clients -- the preferred model -- or sell turnkey systems.
Agatal got its toe in the Wi-Fi waters almost 18 months ago when it installed its first, and so far apparently only customer site -- a hospital in Roanoke VA, for which it implemented a patient bed-side Internet access system that ties into the HealthCite portal.
The family -- brother Inderjote (Bobby) Kathuria is president of Agatal, while Chirinjeev Kathuria is chairman -- actually turned to fixed wireless about two years ago when it began developing the gateway, but the company has been in stealth mode for the most part since then.
"This is the first time we've really talked about Agatal," Kathuria says.
Things are starting to heat up now. Agatal recently secured the services of a CEO, a veteran senior executive of a major telecom equipment vendor -- though the company has yet to make an official announcement and Kathuria wouldn't reveal who it is. And Agatal actually has a proper Web site now.
More to the point, the company has, according to Kathuria, cut some significant deals and is close on others -- though it has little tangible to show for any of it yet. Agatal sometimes seems to be a paper tiger, but that may change soon enough. Here's a list of deals Kathuria says the company has cooking -- or cooked:
- Agatal has sold three additional hospitals on the idea of installing broadband wireless patient Internet access systems using the HealthCite portal as a front end. Hospitals are like any other business, Kathuria notes, they need a competitive advantage, and this is one.
- It has sold its services and technology to the State of New Jersey to build three Wi-Fi hotzones, similar to the one created by WiFi Metro (now HotSpotzz) in Palo Alto CA. This is part of the state's Urban Enterprise Zone (UEZ) business infrastructure development program. The hotzones will take in at least three hospitals and one university.
- It has sold its first HDU in Chicago. In this market, the company is looking to strike deals where the property owner or condo association pays for half the network costs and Agatal provides a service to all tenants at a discounted rate of about $30 to $50 a month which will be folded into the owner's or association's other assessments.
- It has sold its first large enterprise customer, an insurance company that Kathuria says is the second largest in the country, with 200 offices. This is a deal to install and manage wireless LANs. Agatal will also target small and medium enterprises, he adds.
- The company is negotiating with a major national restaurant chain with thousands of outlets to install Wi-Fi hotspots. This is similar to the T-Mobile project with Starbucks, Kathuria says, only bigger -- with 800 to 900 of the company's locations targeted for installation.
It's perhaps curious that none of its partners in these deals has allowed it to go public yet, but it could be just coincidence that so many deals at the same time are between the signing and public disclosure stage.
Kathuria seems particularly enthused about the HDU market. "The real estate market is very soft right now, both commerical and residential," he notes. "New installations all want to get the highest-paying tenants. To do that they're going to have to offer something more unique." Wi-Fi Internet access could be it.
The idea is that new housing developments will offer broadband access in a tenant package. All tenants will pay for it as part of their condo fees or leases, even if they don't use it. The owner or association helps pay for the network and Agatal manages the service.
"What's amazing is that to put up a Wi-Fi network in a 50-storey building only costs about $60,000," Kathuria says. "All you have to do is put two access points in each hallway and some CAT-5 cabling. It's smashing the traditional telecom economics."
He figures Agatal can break even on an HDU within nine months and turn it into a cash cow.
If you didn't know the man's credentials in telecom and wireless, you might be tempted to think this sounds a little naive. After all, any experienced Wi-Fi installer will tell you that a huge chunk of the cost of building a wireless network is in the time and skill required to design and install it so it works right the first time.
In any case, the HDU market, Kathuria says, "is huge."
Agatal's primary advantage in all of its target markets -- besides an ambitious, multi-faceted and apparently well-funded business plan -- is the Agatal Gateway. The gateway, which Kathuria characterizes as "similar to the architecture of Bluesocket's product but with a lot more features and more focused on network management," performs a variety of functions.
It maintains access policies, allows hotspots to assign levels of access (based on management, employee or guests), provides authentication and registration, allows self-service provisioning by hotspot owners, and provides timed network access control and content filtering.
It's not clear that the Agatal technology does anything more or better than other products of its kind -- or combinations of products configured to fulfill a similar function. Still, the company must have a convincing story to tell about its technology to have sold the customers it says it has.
Agatal has competitors, of course, and better established competitors in most cases. Kathuria notes however that its main rivals in the HDU market are cable and DSL providers and Wi-Fi gives Agatal a clear economic advantage.
"We're not naive," he adds. "We realize eventually others will catch on to what we're doing, but right now there are no other Wi-Fi providers in this space as far as we know."
In the hotspot market, he identifies companies like Boingo and Joltage as obvious competitors, but they're not building networks, he notes, they're aggregators. "We're going to be building the network," Kathuria says. "It's so cheap to do. And if we own the network, we get a bigger share of the revenue."
The company has announced $10 million in first-round funding. The rest presumably comes from cash flow from the family's other extensive business interests.
Can Agatal achieve what it's setting out to achieve -- generate $10 million in revenues by next quarter and build itself over the longer term into a major telecom provider? Stay tuned. If it meets that first goal, you can bet you'll be hearing a lot more about this company.
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