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Chapter 50: CRY 'HAVOC!', AND LET SLIP THE DOGS OF WAR

Interesting fellow that Shakespeare because not only did he write plays, he also acted in them. And although Tales from the Towers, doesn’t hold a candle (pre-electric times, you can groan now) to Mr. William’s contributions to culture, I have a double life too. If you haven’t guessed yet, writing articles really isn’t my full time job (now my wife is groaning), I actually run a WISP, do installs, and handle tech support calls. After 10 years though, and many mistakes and successes, I’ve decided to rethink my network from the ground up as if I was starting tomorrow and share that. The idea is to lay out a simplified road map that will bring forth thousands of new WISPs into the market that can start breaking down the digital divide without taxpayer money and creating a new business. Since a thousand bee can take out the biggest animal, the more companies that jump into the industry, the better the chances of competing against the incumbents. It’s time to open the floodgates of small business entrepreneurs and begin the war for last mile bandwidth delivery everywhere. And although few outside Star Trek fans will recognize one of Shakespeare’s most famous sayings, they will recognize this modern variation, “Who let the dogs out”! Hopefully it’s the WISP industry.

 

Why would anyone want to start a WISP you ask? How about this, a typical WISP gross profit margin is about 95%. Yes, you have read that correctly. In the U.S., bandwidth costs average about $5 per Mbps. In some areas, it’s as little as 40 cents and others as much as $300 but in the 90% of the country that I believe WISPs have the greatest opportunities, bandwidth is inexpensive. Even if it’s $20 per Mbps, that’s still a profit margin of 80%. Wal-Mart goes apoplectic if they get half that and they squeeze suppliers like ripe lemons. And my razor has more margin between the blade and my face than Amazon has on their products. For any small business operator to find a product that he can buy for $5 and resell for $100, legally I might add, is like printing money.

Between the government, the cellular operators, and all the FTTH socialists whose business plans are a lesson in the inability to actually create a profitable business model so let’s get the government to fund it, nobody is really telling the truth on how easy it is to be a last mile bandwidth provider. Ubiquiti, Cambium, and a few other companies now have inexpensive and broad product lines that are simple enough for even beginners to install and manage. And that wireless equipment can deliver speeds that make DSL operators cry. Or a wireless provider can drop the bandwidth down to DSL speeds and undercut the pricing. Either way it’s a win-win situation and a golden opportunity to jump on the bandwagon of an industry that is only going to grow.

Before jumping into any business though, we need to analyze the competitive environment. Technology wise, DSL and Cable providers own most of the population bandwidth. What’s interesting here is that while DSL is on the decline in general, due to limitations of copper wire, it’s not really being replace by better DSL or cable. In some areas, CenturyLink areas for example, they are pulling fiber closer to the homes to get their speeds up to 40Mbps. Unless another wireless technology comes along though, that’s probably their swan song until they upgrade to FTTH (don’t hold your breath waiting for it though). Even the government won’t give DSL providers any more money for new deployments but the billions of dollars that Qwest and Centurylink took of taxpayer money makes me wonder what happened to it. For $4B dollars, a WISP provider could have provided 30Mbps internet and phone to about 60 Million households but hey, I’m clearly not as smart as the government bureaucrats who gave them that money. I also wonder how close CenturyLink came to that number?

DSL providers have 2 basic areas, cruddy service in remote areas where they are the only providers and reasonably decent service in areas where they probably compete against cable providers. There are opportunities in both areas although the cruddy areas iswhere I would start first. Those are typically pocket or peripheral areas but if you can get about 20 customers or more, it’s a profit center. It’s also a place to build off of.

In areas where they are delivering far more bandwidth, they are also charging more. In addition, since they also try to bundle, they also have to add taxes. In Arizona for example, a phone/internet bundle CenturyLink package delivering 1.5 to 40Mbps with bundle is about $65. They also have a package with Direct TV and then the costs start climbing well about $100. And all those packages come with contracts of at least 1 year.

Cable providers aren’t much different though.

I’m going to start with the assumption that the absolute minimum skill set necessary to start a WISPs is the ability to install an antenna on a roof without becoming a physics experiment on the rate of acceleration of gravity. That’s not to say that designing an operating a WISP doesn’t take a huge amount of technical skill and resources, of course it does. However, a small WISP of up to about 500 users is entirely possible with a minimal skill set, a reasonably small level of funding, and the knowledge of taking

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