Tales from the Towers, Chapter 39: WISPA exhaustion

Rory Conaway goes into more detail on how to make money as a wireless ISP and reports on the interesting things he saw at the most recent WISPALOOZA, the annual gathering of wireless ISPs, putting an end to the belief that what goes on in Vegas, stays in Vegas.

If you haven’t been to WISPAPALOOZA before, be prepared to find out it’s nothing like your father’s WISPAPALOOZA.  This event was so full of activities, speakers, and new information that I think WISPA kept Vegas awake, not the other way around.  If you think Las Vegas is a vacation when WISPA is there, think again.  For all of us who have been to conventions, this is more like hanging around with 1000 friends who want to help you make your business better.  Even though I have to admit to watching a couple of playoff games with the Giants embarrassing the Tigers (maybe Obama can get Detroit a bailout for Justin Verlanders arm since he is a union member), it just meant staying up later to discuss even more ideas.  I literally didn’t get more than 4-6 hours of sleep on this trip any night and I wasn’t even at the hotel to experience the fire alarm treatment.  I finally sent a postcard to the Blackjack dealers on Thursday and told them I would try to stop by next trip.

I want to throw out a thank you for all the vendors who sponsored the different meals that were provided.  The food was excellent and bountiful.  It also destroyed any chance I had of fitting in my short pants for my vacation next month.  The service was even exceptional with the hotel staff in the convention center demonstrating probably the friendliest presentation I’ve seen.  Rick Harnish and the WISPA staff did a great job selecting this hotel and putting on the event.  Cambium could have sprung for a bit more of the roast beast at their shindig though.  When I got my first helping, the chief told me it was very lean.  I didn’t think he meant the availability so which meant no seconds.  I’ll have to bring two plates next time.  Guess they don’t want pictures of fat guys like me climbing towers putting up the new 450s.

Volunteering for several presentations has the downside of missing several other presentations that I wanted to see.  I heard good things about several of them and the videos are going to help.  It would be nice to put better audio/video systems together since the value of the material and experienced presented would be well worth whatever extra cost might be necessary to make that happen.  I also think they could be a revenue producer by charging for downloading the material.  I’m waiting for the videos that were done to come out to see if I need to get a new barber and if my Barney Fife Security Powerpoint slide was a hit or miss.

Conversations on this trip ranged from funding to interference to new products.  Then there was Trango who got the mistaken idea that we wanted to hear Hip-Hop music at ear-splitting volume in the main vendor room.  If you think I’m joking, just look for the YouTube video of the other vendors faces while it was going on (just kidding , the video is being held back to protect the offended).  It was so loud, you couldn’t hear the person speaking in front of you. I was reciting my recipe for spaghetti and the consultant I was talking to thought I insulted his sister.

I get it, I’m old, boring, and an engineer.  I would rather listen to Boston than some guy spitting in a microphone.  Melody and tone somewhere in sync, create a pleasing experience for me.  I don’t want to hear records being spun backwards at full volume while I’m in a customer sales meeting unless I’m listening for messages from the beyond the grave (1970s reference to all the urban legends that spooky messages could be heard by spinning records backwards).  Maybe it’s me but that’s kind of a distraction.  Whoever thought that was a good idea clearly didn’t understand their target audience and should be a huge lesson to all of us.  If you are trying to sell something, create an environment that is pleasant, not one that makes your clients’ ears bleed.  Holding meetings at the local night club featuring Kaskade is not going to result in a sale if the client can’t hear you pitch your idea.

 Ubiquiti shows off new products

So what I get out of the show that I didn’t know?  Ubiquiti showed off some new products that should increase the bottom line and talked further about products that they already announced.  Things like the NanoBridge HP and Air Gateway, a low-cost clip indoor AP that attaches to the power supplies on Nanobridges means I’ll be making more money on my installs.  Although having less expensive client radios is a big issue, I see using them more as low-cost backhaul for my microcell models.  The Air Gateway is my short term personal favorite though, as something that will enhance my short term ability to get new clients and make more money.  I also learned that staying with family on business trips and trying to do Powerpoint slides at night are not compatible when your brother’s bulldog is now your new best friend and has intestinal issues.

What was interesting was seeing that WISPs aren’t the only people attending WISPA.  Ubiquiti going public and the Titanic-like sinking of its stock price (check out UBNT) means that many of my new investment friends finally want to know what’s happening in the industry. I’m sure it has nothing to do with the lawsuits that are now coming out of the woodwork against Ubiquiti and all the productive things that lawyers do for businesses in this country. Yes, it’s good to have a partner agreement or client contract that is solid.  However, instead of suing Ubiquiti for getting counterfeited, how about suing the federal government for letting the Chinese steal every intellectual property our entrepreneurs have developed and not imposing penalties? Even better, sue the Chinese government for looking the other way while corporations like Huawei manufacture cloned products of everything we created.  I say put rules in place that allow product lawyers to sue Chinese companies. That ought to bring their country’s productivity to its knees.  Make damages retroactive to 1980 and let’s see what happens to the manufacturing industry in the U.S.  I could do this all day but my soapbox is making my feet hurt.

 Cambium enhances its Canopy product line

Cambium showed a presentation demonstrating an incremental increase in the Canopy product line with the 450, its capacity, and its non-line of sight (NLOS) capabilities.  My original premise still stands: advanced RF engineering is a requirement for large area tower-centric models, and the 450 has that in spades.  As production and more bands become available for the 450, I’m sure a lot of farm and forest folk are going to be happy to see NetFlix in a higher resolution their old 1960s black and white TV.  The 450 though, uses OFDM and that means to maximize AP efficiency, coverage areas are going to have to shrink. However, even at the extended ranges, the throughput will take Canopy into the next generation.  Of course, if they cheap out on my seconds for Roast Beast again at the Cambium event, I’ll be telling how the plastic in the cases causes warts on your fingers.

 How WISPs can compete with cable and DSL Internet service providers

In my most competitive environment where we compete against cable and DSL, we used to charge a fixed fee for installation and then charge a fee for service.  In this area, we run the system more as a hot-spot billing model instead of a monthly billing model.  The clients can prepay for what they need for 1 day to 12 months.  The longer they prepay, the higher the discount.  I was in the middle of a presentation when I received a text stating that CenturyLink dropped their monthly price and wasn’t charging for installation.  Since I was discussing installation charges earlier with some colleagues and how important it is to cash flow, I decided that a response was needed that didn’t damage our cash flow.  By the time the presentation ended, I announced that our response to CenturyLink’s move was that we were going to charge $249.95 for the installation and give 6 months of free basic internet.  Since we were including AirRouters with the installation to match DSL and cable offerings, AirGateway’s will drop my cost another $20-$25.

This particular model works at $249.95 because we keep the distance of the clients down to ½ mile or less in the vast majority of cases.  This allows us to use Locos instead of Nanostations or NanoBridges.  That brings the cost of the entire installation to between $150-$170.  Since we charge $120 for 6 months of basic service, we are only subsidizing $20-$40 on service over 6 months over our regular service.  Although the rates may differ depending on the area, the goal is to give the customer additional value without disrupting our cash flow significantly. This model is designed to capture 15% of the market in the highest competitive environment imaginable ($18-$20 cable and DSL competitors with no contract and no installation fee).  I think this is the Ground Zero for CenturyLink’s competitive price testing and we are thinking now that we might be able to get to 20% or better.  Early response to this has been extremely positive from the clients who just ordered the service.

Some of you have asked me how I compete with bundled services.  I don’t, it’s not my market.  Let Comcast, Cox, Time-Warner or whoever keep the bundlers and the file-sharing fans.  I don’t like taxes, paperwork, or government.  The hot-spot idea means cash up front, no billing paperwork, and the government doesn’t get a penny (because they would just give it to CenturyLink anyway to compete against me).  My market goal in this type of environment is 15% of the clients.  A competitive pricing model gets you that market share as long as your service works.  There is no way to be price competitive if you need a large support staff for the backend for this type of model.

The next question is how do we keep the distances to ½ mile and keep our costs down?  We use houses as AP sites.  Tower-centric models don’t work in urban and city environments.  The technology just isn’t there for 10,000 clients off a tower in a low-noise environment within a city.  As the population density increases, so does interference. Your chances of getting a clean signal to the client at 5 miles dramatically decreases. The microcell model is the only financial model I’ve been able to make work on paper and in practice.  Mesh models don’t’ make financial sense (if you are looking to make a profit) as many bankrupt companies and cities have found. They are too expensive to install and maintain. A microcell model is two magnitudes cheaper and focuses the capex where it delivers the highest revenue per investment.

Many of you don’t like to use houses as AP sites.  I get that since I’ve had issues like a customer unplugging everything and then leaving for Taiwan for a month.  He forgot he was an AP location and was trying to protect his equipment.  We now have site lease agreements which guarantee that a neighbor either has keys or we place everything outside so we have access and never enter unattended properties without a pre-approved chaperone.  We also have a battery box that can go on a roof and keep the equipment running in case the power is turned off for an extended period of time.  No, it’s not the most professional but it’s gets you into areas where towers may not be available or line of sight (LOS) is difficult because of trees. The short distance also makes NLOS more reasonable for 900MHz and 2.4GHz, even in high interference environments.  If the client has increased usage, then add a breaker box outside and even a meter if it makes financial sense.

We typically give the client free internet in exchange for this co-location service and there is no shortage of people who want Internet service for free.  For every customer we sign up this way, we expect at least 10 paying clients per antenna at a minimum of $20 per month.  Theoretically we could support 30-50 clients depending on how much bandwidth we need to give to be competitive.  Total cost for this AP installation was about $450 not including our 2 hours of labor.

This design is now being upgraded further with both 2.4GHz and 5.8GHz.  Since trees are obviously not our biggest issue in this particular area, we can put everyone on 5GHz and use the 2.4GHz for a large area hot-spot.  That means picking up renters and guests and actually creating close to a mesh-type WiFi model.  The higher gain 2.4GHz antennas are already picking up customers at 500-800 feet who don’t have outdoor radios.  We have been supplementing those with WiFi stations from Ubiquiti for the longer range users, but apparently we are the only people on the planet that found a use for those.  Oh well, that means lots of left over inventory until we saturate the area.

The WISP market needs to expand. Wireline is creeping into the rural areas, fiber is great but not cost-effective for most areas yet, and bandwidth needs are going up.  I left out a few additional issues that we resolved such as backhaul, bandwidth, and additional services we will offer in the near future.  The goal is to build a system that gives WISPs a chance to take the fight to wireline, not hide from it.  ’m tired of wireline companies that subvert the free market system via with government subsidies. CenturyLink is the poster boy for that, although Verizon and AT&T are just as guilty. If they want a fight, I believe that this model is the next weapon against them with next generation 802.11 products ramping up to be a pain in the neck of the telecom incumbents. We just need to apply them.

For those of you who were at WISPAPALOOZA and stayed awake during my presentations, you have already heard most of this. For others who have asked for a copy of my Powerpoint slides, believe me, they are functionally useless without my smiling face describing why a picture of Barney Fife has meaning to your business. I do believe they are going to get posted eventually, so good luck with that.  I enjoyed meeting many of you and definitely learned a whole bunch more.  If you are already in this business or plan on becoming a WISP, don’t miss the next one (okay, a shameless plug but maybe Harnish will influence Cambium to save me seconds on my Roast Beast next show).  Don’t you just love a running gag?

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