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VPM Meets GRIC, Again

This is good news because giving international roaming customers what they want is great business for ISPs. They're premium customers. Just ask Mark Stout, president of Folsom CA-based VPM Internet Services Inc.

VPM is an Internet and e-commerce company with about 4,000 corporate users, mostly in Fortune 500 companies, including Sun Microsystems and Texas Instruments.

Stout was one of the first ISPs based in the U.S. to sign an addendum on his agreement with GRIC Communications Inc. The rider embraced reselling GRIC's new Wi-Fi-based broadband roaming services as well as its standard dialup services.

VPM has been reselling customers the GRIC dialup services since early 2000 and now has about 3,500 subscribers.

"I have customers now who are asking for it [Wi-Fi roaming]," says Stout. "Will it be a key selling advantage for us? Not immediately. But I do believe it's where we're going. In fact, I think it's going to be critical."

Diminutive cluster
GRIC is one of a small group of companies providing worldwide roaming servicesmostly dial up at this point. It has about 15,000 points of presence in 150 countries, all provided by independent members of its GRIC Alliance.

Some members, and they include major carriers in Asia-Pacific such as China Netcom, only provide access footprint. Others both provide footprint and resell roaming services to their own subscribers. And still others, like VPM, only resell the roaming services.

GRIC also sells the roaming services direct to large enterprises.

The company is busy building up its Wi-Fi broadband wireless footprint and expects to begin seriously marketing it to members in the first half of 2002, says Mike Smart, vice president of product management and engineering.

So far, it has three Alliance members with Wi-Fi POPs in airports, hotels and other locations: China Netcom Corp, with about 13 at the time of writing, SkyNetGlobal Ltd. with over 100, mostly in Australia and New Zealand, and NetNearU with 30 locations in North America.

But the footprint is a moving target. All three existing partners are in the process of building out their Wi-Fi POPs and GRIC is negotiating with five other prospective Alliance members that have wireless infrastructure in place.

"We're looking at having somewhere near 1,000 [Wi-Fi POPs] by early next year," Smart says.

Unknown margin potential
Stout hasn't seen GRIC's Wi-Fi pricing yet so he doesn't know what kind of margins he'll realize on reselling the wireless roaming services specifically. But if it's anything like reselling GRIC dialup service it will be well worth the trouble.

Stout says he makes 100 percent on the monthly subscription fees customer's pay, somewhere around 40 percent on hourly roaming charges and 30 percent if the customer opts for a flat-fee all-you-can-eat package.

GRIC charges new reseller members of the Alliance about $5,000 to joinor it did when Stout signed up in 2000and $1,000 a year in maintenance and support fees. There are no other costs involved beside normal overhead, Stout says.

Setting up his servers to interact with the GRIC network for subscriber authentication was hassle-free. The process is "pretty easy if you have a basic understanding of UNIX and Radius servers," he says.

Stout chose GRIC over its principal competitor, iPass, mainly because GRIC insists service provider Alliance members sign service level agreements (SLAs) with penalties to ensure they stay reliable.

"It's one thing to have all those service providers as partners in the Alliance," Stout says. "But if [their POPs] don't work, they don't do you any good. And since we're dealing with business customers, we needed somebody more reliable."

VPM backed into the ISP business. Stout, then an engineer at Intel, says he saw the e-commerce boom coming in 1996 and wanted to grab a piece of the action. He thought the way to do it was set up cyber shopping malls. VPMshort for Village Potpouri Mallwas launched to do that.

Stout was lucky perhaps to have started at a less forgiving time in the history of the Internet.

When cyber malls didn't pan out, he turned to Web hosting and gradually added "value added" services"anything that would enhance and make the business online experience more profitable"including, eventually, dialup access.

Within a couple of years, access customers were starting to ask about international roaming.

"We were in a global economy now," Stout says of the business climate then. "People have to start thinking past their own regions. And as that happened, they had to start going to these different places, to meet customers, make presentations.

"So you had the people who were already traveling, plus a whole influx of new people traveling, which drove the market for roaming services."

Large-scale meandering
But in these early days, about 1998, there were only two companies Stout knew of that were offering international roaming UUNet, now a Worldcom company, and IBM Global Services. IBM didn't have resellers.

VPM was routinely referring customersexisting customers and new ones coming in the door asking for roaming servicesto one of these two or to anybody else Stout thought might be able to help with a specific international need.

"Eventually I started thinking, I've got to figure out a way to keep some of this business," he recalls.

Stout tried buying UUNet international service at about $30 a month and reselling it at $50. "And we had no shortage of takers," he says, "which showed me there was definitely a market here."

Eventually he found GRIC with its larger footprint and seamless authentication, security and settlement services.

Now Wi-Fi promises to build on the lucrative market VPM is already enjoying. GRIC believes high-speed, automatically-on roaming will mean subscribers begin to consider doing things online while roaming that they don't do now because dialup is too slow or too much trouble.

GRIC hopes to add value-added services to help support applications like instant messaging and online collaboration in roaming mode.

Stout, while he was enough of a believer to sign up to resell Wi-Fi services and has some subscribers involved in GRIC's beta testing, is taking a wait-and-see approach.

"The big question," he says, "is will this enhance the business customer's productivity. You would think so. If the answer is yes, then this is going to become a very valuable service."