Your business customers all want fast Internet access. That goes almost
without saying. For small businesses, DSL seems the obvious solution.
But what do you do if you can’t get DSL?
This was a problem ISP Prime
Communications Systems Corp. faced until recently—even though
DSL was supposedly available from Bell Atlantic across its Buffalo NY
sales area.
“Of the people who ordered DSL from us, 90 percent didn’t qualify,” says
Prime vice president Kirk Miller.
Most were too far from the phone company’s central office, some as much
as 10,000 feet beyond the 18,000-foot limit for a good DSL connection.
“And I don’t see the phone company putting in new central offices,” Miller
says.
Wireless to the rescue
Prime solved the problem by connecting those customers wirelessly, using
bandwidth from Clearwire Technologies
Inc., a Dallas Texas-based operator of wireless local loop networks
in Buffalo and the Dallas-Fort Worth area.
Clearwire uses unlicensed 2.4GHz radio spectrum and offers fractional
T1 connections up to 640Kbps. It manufactures both customer premise and
network equipment and manages all aspects of setting up the networks and
provisioning end customers.
A second generation of Clearwire’s technology due out next year will
boost maximum connect speed to 1.5Mb.
The company launched service first in Dallas in June, then in Buffalo
in August. It expects to be in 28 major U.S. markets by the end of 2000—possibly more—and in 120 by 2002.
Ta-ta, telco!
Clearwire is just one of a growing number of wireless
product and service vendors targeting the ISP community. Fixed wireless
access, they say, will generate new revenue and increased profits and
help ISPs save customers money and serve them better—especially in
remote areas. Best of all, with wireless, ISPs don’t have to deal with
the phone company.
“ISPs abhor the phone companies,” says Clearwire vice president of marketing
Fred Haskins. “Their prices are too high and it takes way too long to
get a connection. ISPs would love to be able to buy the local access piece
from someone who is not competing with them—which the phone companies
are.”
That sounds about right, except wireless network equipment vendors admit
getting ISPs to buy into their vision has been a frustrating experience.
A few ISPs have set up their own wireless infrastructure, but not many.
Tempting package
Clearwire, however, claims to have found a winning formula. ISPs don’t
have to learn how to operate a wireless network—or sink money into
it. All they have to do is connect their POPs to Clearwire’s and then
sell bandwidth. They get residuals on access revenue from thir customers.
Clearwire even looks after customer service, including first-level technical
support.
“ISPs are really not interested in operating wireless infrastructure,”
says Haskins. “They want to stay focused on what they do best: selling
access, e-mail, Web hosting—their core competencies.”
Clearwire found this out the hard way. It began by offering turnkey systems,
but had few takers. NewEraCom, a
company in Asheville, NC selling a similar instant-wireless-ISP package
had the same experience and also stopped selling ISPs turnkey systems.
Clearwire’s new business model has been received enthusiastically by
ISPs, Haskins claims. Prime, a Tier 2 ISP with 12,000 customers, is one
of six ISPs reselling the service in Buffalo. Clearwire has a similar
number of ISP resellers in Dallas.
Wireless double punch
Miller cites two main reasons for using Clearwire. It works most places
where DSL doesn’t, not everywhere, but most of Prime’s market area—with
more coverage to come when Clearwire finishes its build-out. Then again,
he can get customers up and running much quicker than with DSL—days
as opposed to weeks, hours in an emergency.
Prime also recommends Clearwire over DSL when both are available if the
customer plans to put a Web server at the end of the connection.
“We’d rather put in wireless because it gives us better up-time,” Miller
says. “It’s in the four-nines range (99.99 percent). We’ve got about 20
systems out there and there was only one time when [the network] went
down. And that was a human error that won’t happen again.”
Miller downplays the higher profitability from using Clearwire, but admits
Prime does generally make more from bundled-price Clearwire accounts than
from DSL accounts—but less than it makes from leased-line customers.
Most wireless vendors, including Clearwire, insist their solutions save
end customers a bundle—from 25 to 50 percent in the Buffalo area, according
to Haskins—and ISPs can grab some of that by marking up the service.
Not all take advantage of this opportunity.
More than two can play
Clearwire with its limited coverage is not the
only wireless vendor offering ISPs reseller opportunities, although the
opportunities are still few and far between.
Global Pacific Wireless Internet
in Orange County, Calif.—a division of Worldwide Wireless Networks
Inc.—wholesales to ISPs and other kinds of resellers, but unlike
Clearwire, also sells direct.
Global uses a combination of unlicensed 2.4GHz spectrum as well as licensed
5.6- and 23GHz bands and equipment from a variety of vendors to offer
connections from 128 Kbps to 150 Mbps. The Global network covers just
Orange county.
NewEraCom in the near South will also be offering ISPs reselling opportunities
in the future, says CEO Jane Hatley.
Reselling, of course, is not the only option. Even if Clearwire and NewEraCom
have stopped trying to sell turnkey systems to ISPs, others, such as Global,
continue to offer instant-wireless-ISP bundles.
And, as we’ll see in future articles in this series, some adventurous
ISPs are building their own wireless infrastructure from scratch.
