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Finding success in the Heartland

by brad smith
January 21, 2002

When Kyle Ackerman set out two years ago to start a broadband wireless Internet business, he knew he couldn't just build a network and hope subscribers would sign up.

To accomplish what he wanted, Ackerman planned to involve the communities he would serve as part owners in his wireless Internet service provider business. His tactic apparently worked because Ackerman's Xtratyme Technologies is now one of the largest WISPs in the country, serving 105 markets in Minnesota and one in Iowa.

While many of the narrowband, mobile WISPs, such as OmniSky Corp. and Yada Yada Inc., were acquired or approaching bankruptcy proceedings last year, the broadband WISPs that primarily use 802.11 are thriving.

The Broadband Wireless Alliance last week issued a report showing that broadband WISPs served 1,966 markets at the end of 2001, up from 723 in 2000. The top WISP, in terms of markets served, was Prairie iNet, which operates in 150 markets in Iowa, Illinois, Kansas and Nebraska.

Robert Hoskins, who heads the alliance, says most of the leading WISPs use unlicensed spectrum in the 2.4 GHz and 5.8 GHz bands. Most also focus on fixed access, although some have gotten into portable, mobile and even voice access. Other than that, their business plans vary widely.

Hoskins says it costs about $25,000 in hardware to build out a network that can serve 3,000 customers. Pricing generally runs between $30 and $200 a month, depending on user demands. "By charging a minimum of $50 a month, a broadband wireless system can deliver $1.8 million in revenue, which is a gold mine to most ISPs," he says.

Ackerman won't say how much Xtratyme Technologies brings in, but his business model involves sharing revenue with the communities with whom he partners. Most are rural counties in Minnesota, but he also serves the town of Mankato. He has more than 600 customers, about 85 percent of which are consumers.

The "communities" that Xtratyme serves include individuals from businesses, governments or community organizations. Each community brands the WISP service itself, but it's "powered by Xtratyme," so it has a local identity. The community pays about half the cost to launch the network and receives about half the revenue.

Xtratyme uses 802.11b technology but relies on frequency hopping instead of the direct sequence used by most public hot-spot wireless local area networks. His radios, mounted on 69 towers on existing structures such as water towers or grain elevators, typically cover 6 to 7.5 miles.

The towers form a mesh across southern Minnesota, each connected by microwave radios instead of a wired T1 line. "If I serve a farm town of 200 people, I can't economically justify a T1," he says. But he can quickly amortize the cost of the radios.

His mesh network also allows him to dynamically adjust the bandwidth depending on user loads. Although the focus of his network is fixed access, it can be used in a portable or even mobile fashion. "You can drive 200 miles through Minnesota and stay connected," Ackerman says.

Xtratyme also may use the network for voice calls if it can overcome technical issues related to latency.

While many WISPs serve areas outside of large cities, some go into metropolitan areas, Hoskins says. Among them is Renaissance Networking, which targets areas of metro Phoenix not reached by digital subscriber line or cable.

Hoskins believes 2002 will see a further surge in the growth of broadband WISPs. He also says more companies will resell WISP networks, providing marketing and sales resources the networks don't have.

Despite the market failures of companies involved in local multipoint distribution services and multichannel multipoint distribution services technology, Hoskins believes broadband wireless will succeed using unlicensed spectrum. "I think the broadband wireless day is just around the corner," he says. "The reason is that these are all small companies being successful. As they get more customers, they'll become better known. We have 2,000 markets launched, and most people have no idea they exist." [WIM]