Towerstream at the Space Needle

Towerstream has slowly but surely expanded its services across big cities in the United States for the last few years, delivering fixed WiMax to businesses in Boston, Providence, Newport, New York, Chicago, Los Angeles and San Francisco. It was ready to start building in Seattle when CEO Jeff Thompson says he had an interesting phone call.

“Before we did a greenfield installation there ourselves, we talked to Speakeasy,” he says. “They said they were more interested in their VoIP product efforts and were looking to sell.”

Speakeasy, a nationwide ISP, launched its fixed pre-WiMax service using Alvarion equipment in Seattle in the summer of 2005. According to an article in the Seattle Times, Speakeasy found customer acquisition — specifically, the truck rolls required to install customer premises equipment (CPE) — a bit much to handle, since it doesn’t have installation teams of its own. The company decided it was time to turn the network over to someone else so it could concentrate on nationwide VoIP service.

And so the Seattle network is now Towerstream’s, giving the Rhode Island-based company an instant market without needing to install equipment. Towerstream uses Alvarion and Aperto Networks equipment in other locations, and Thompson says, “It’s equipment we’re used to using every day… it was easy to get under control right away.”

In addition, this deal actually puts Speakeasy in an even better position for WiMax use — it will now buy wholesale from Towerstream, so it can resell access to customers in any of the existing Towerstream markets, not just in Seattle. Towerstream did not say how much the Speakeasy buyout cost.

Towerstream also went public this week, selling on the Nasdaq Over-The-Counter (OTC) Bulletin Board with ticker symbol TWER. The move raised almost $15 million for the company, which it will use to bolster its sales and marketing.

Towerstream is not alone in the WiMax game in Seattle. Clearwire has also launched service there. It’s the only city where both are available, says Thompson. However, he doesn’t consider it competition, as Clearwire is trying to sell to consumers and residential customers. Towerstream is strictly sticking to businesses that need an option for broadband.

“Interesting statistic: 96% of business buildings in the country don’t have an alternative broadband provider,” says Thompson. “So it’s a monopoly out there for the wired carriers. We want to be the alternative.”

Towerstream’s alternative wireless T1s cost about $525 per month for 1.5 Megabit per second (Mbps) download speed, and that includes 4 Vonage-powered VoIP phone lines. Service scales up to a 100 Mbps connection that is the equivalent of 66 T1 lines, for $5,000 per month. The company also sells a High Availability T1+ (HI-Vi T1+) for $600 a month that promises 99.999% uptime, meaning less than one minute of non-connectivity per month. They do this by using dual base stations for redundancy.

Thompson won’t say what the next city is for Towerstream, only that it will continue to open one or two new markets per year. That may include more in 2007, since Seattle was delivered to them in a tidy package in January.