Riding The Jetstream

Jetstream Wireless, a new entrant in the Wi-Fi
hotspot lottery, is nothing if not ambitious.

"Our goal," says company president Arun Sondhi, "is to be among
the top five hotspot players in North America by the second quarter of 2003."

Well, let’s see, we already have iPass,
GRIC, Wayport,
T-Mobile, Boingo, Airpath
Jetstream, based just slightly off the beaten track in Chippewa Falls, WI, may
have a long, bumpy flight ahead to meet its objective.

The company so far has about 10 confirmed hotspots, including: a Holiday Inn
in Eau Claire, WI, just east of Minneapolis-St. Paul; other hotels managed by
the same local company, Larson Management; the Chippewa Valley Regional Airport;
two other airports yet to be announced; and the Eau Claire Convention Center.

Sondhi says Jetstream expects to have 60 sites by the end of this year and
300 by the second quarter of 2003. While it currently has just 20 hotspot subscribers,
he predicts it will have 2,000 within six months.

Jetstream doesn’t expect to reach these goals all by itself. Like other grassroots
hotspot companies, it’s smart enough to realize that, at least for the foreseeable
future, it will need to co-operate as much as compete with other players. In
fact, Jetstream already has a roaming agreement in place with Airpath.

"This industry is not at the stage where operators can be competing against
each other too much," Sondhi says. "There is a certain education level
or awareness level that has to be reached first among hotspot owners and subscribers.
But since this is a sunrise industry, there is ample opportunity for several
hotspot network operators to thrive."

Jetstream is at least not a raw start-up. It’s a joint venture between two
seasoned companies that may at first seem strange bedfellows, but could end
up complementing each other nicely:

Network Innovations, also of Chippewa Falls,
is a regional communications company that operates several ISPs, provides a
variety of other Internet services, including turnkey outsourcing of back-office
functions for ISPs and WISPs and resale of AT&T and Qwest Internet access.
Heartland Aviation of Eau Claire
is a small regional airline that has other travel-related business interests
and is also involved in airport management.

The team now running Jetstream comes mostly from Network Innovations. It originally
came together three or four years ago at Intellicom, a SoftNet
Systems
subsidiary that provided two-way satellite Internet services. SoftNet
was also a partner in SoftNet Zone, which in turn operated the Laptop Lane network
of airport PC-and-Internet-access kiosks before they were acquired by Wayport.

"We’ve been researching this market for a few years," Sondhi says.
"What we’ve found is that there’s a lot of frustration among property owners
because of their inability to provide the highspeed access services their patrons
are demanding. It requires a very expensive wired or wireless network, and the
solutions available involve a steep learning curve for them. We identified an
opportunity there early on."

Heartland Aviation, Sondhi says, "brings vast experience in several related
verticals, it brings important contacts — and it brings capital to the table."

The two joint-venture partners provided all the start-up funding for Jetstream.
The company is now courting venture capital and angel financing, but Sondhi
insists it can execute the current business plan — 300 hotspot sites by mid-next
year — even without additional funding.

Jetstream is pursuing its ambitious goals on several fronts. It developed and
manufactures the Jetserver, a hotspot server that includes Internet gateway,
AAA (authentication, authorization and accounting) and firewall functionality.
The Jetserver can be placed at the hotspot site itself and/or at a local hub
site serving several hotspots.

The server is at the heart of a turnkey hotspot solution Jetstream is offering
site owners and WISPs. The company sells directly to large hotspot owners such
as the hotels and airports. It’s also beating the bushes looking for WISP and
other reseller partners to market to smaller sites. It already has "a few"
such partners, including in Florida and the Pacific Northwest — though Sondhi
won’t name them.

The bundle of services on offer also includes necessary back-office functions,
such as roaming integration, billing and customer relationship management. These
will be provided by Network Innovations using its existing infrastructure and
software.

The package includes a dial-up roaming network provided by Network Innovations
and its affiliates. So Jetstream subscribers will be able to access the Internet
even when they’re not in range of a Wi-Fi hotspot.

Jetstream can also offer calling-card long distance services, which it hopes
will help make it appear a "one-stop" communications shop for business
travelers — and prospective hotspot partners. The next version of the Jetstream
solution will also include integration of mobile telephony.

As well as building its own subscriber base, the company is pursuing roaming
partnerships with other hotspot network providers. Airpath is the first. GRIC,
Wayport and iPass, which Sondhi sees as eventually being competitors, are for
now targets for partnership deals. Boingo is not a target — Sondhi feels that
company is missing the boat by not courting hotel sites with in-room coverage.
Nor does he consider Boingo a potential competitor.

Jetstream has no one consistent model for dealing with hotspot owners. It negotiates
with each separately, Sondhi says. In the case of the hotels, it typically operates
a pilot project in a few rooms and public areas first, then proposes a deal
in which the hotel buys equipment, Jetstream provides support, the two companies
share broadband access costs — and share revenues.

"The hotels," Sondhi notes, "are hesitant to agree to a monthly
fixed commission. They’re more comfortable with sharing revenues. ‘If you make
money, we make money.’ That’s part of the business plan."

With the airports, on the other hand, presumably because they’re key to building
the subscriber base, Jetstream is prepared to bear more of the technology and
broadband access costs, Sondhi says.

The Jetstream strategy has a few new wrinkles — the range of bundled services
for hotspot owners, the Jetserver. Yet it’s hard to see how it’s different enough
to catapult this company into the front ranks of hotspot network operators.

Sondhi predicts Jetstream will break even in as little as 18 months. As he
says, Wi-Fi hotspot networking is a "sunrise" industry. It’s a new
day dawning. Anything is possible — even a company from the remote Midwest
out-distancing established and well-financed rivals.

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