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

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

“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.”

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