RealTime IT News

Winfire Creates Parent Company, Splits Operations

For the first time in what seems like months, a story including the words digital subscriber line and provider doesn't also include the words bankruptcy, lost service, lost revenues and out of business.

The irony is that the DSL provider is a free ISP, lambasted by the industry as a business model destined for nothing more than a footnote in Internet history.

Winfire Inc., the Internet service provider that made waves in the industry last year by providing free DSL service, is not only doing well but is planning to spin off one of its software divisions to make future DSL rollouts even easier.

The company is a notable exception in both the free dial-up ISP and broadband DSL provider communities, which have been decimated by sinking revenues and a loss of investor confidence. Many providers on both sides have filed for bankruptcy protection and/or went out of business.

Winfire operates under the same principle as Juno Online Services Inc., which entices customers with its free Internet access and convinces them to upgrade service to its premium services.

The strategy, which made Juno the third largest dial-up ISP in the nation, has worked well for Winfire. Approximately 45,000 people around the nation use Winfire, a number which includes free and dues-paying customers. The broadband ISP is not required to disclose subscriber numbers because it is a privately-held company with no plans to go public with an initial public offering.

Steel Holdings Inc., helmed by Chad Steelberg, is now the parent company of Winfire Inc., and Octive Technology.

His brother Ryan, who has been Winfire's president since it first opened its doors, will continue with his duties. Scott Beauchamp was named acting president until someone can take full-time presidency at Octive Technology. Steelberg plans to have someone in the role within 40 to 45 days.

Octive's virtual truck is a network operating system that integrates Web-based registration, automated provisioning, billing, modem delivery and configuration. Also included are aggregated content and applications.

A virtual truck is an automated provisioning process that lets end users set up DSL service without waiting for a technician. Now customers can install DSL on their own, after the DSL lines have been cleared by the local telephone company,

Steelberg felt it was past time for the network operating system side of the house to split with the ISP side.

"Winfire DSL was created to showcase the technology we had, like bandwidth-on-demand, because we couldn't find anyone who wanted to share the revenues they made with Internet access," Steelberg said. "Now that people see what it can do, and they want the service that Octive Technology can provide, they're worried that there's going to be a conflict of interest with Winfire. We thought it would be best to split the two up."

Steelberg feels Octive Technology's virtual truck solution is something the DSL industry could have used last year, which saw the beginning of the broadband ISP meltdown, as many went out of business or filed for bankruptcy protection.

"Our mission is to reverse the trend last year of a lot of the ISPs," Steelberg said. "An easy deployment solution is what we've been missing. The big reason these ISPs went out of business was because they have to spend $20-50 million of their money on infrastructure. Before they knew it, they had blown through their money. We can reverse that with Octive, which charges ISPs on a customer-by-customer basis."

Already on tap to use the new Octive Technology service is FireTap Communications, a high-speed provider and subsidiary of Homestore.com. Homestore.com is a real estate brokerage specializing in online sales.

Octive Technology plans to announce agreements with two other ISPs and a last-mile carrier in the near future. Octive officials hope the new company will become profitable in late Q4