Tales From The Towers

Chapter 60: Who invited you to the party?

By January 12, 2018 No Comments

WISPs are under attack on multiple fronts. For years, WISPs were content to hide in the hills and valleys in the United States and in the underserved areas around the rest of the world. When the Internet expanded, companies like NetFlix and YouTube, and bandwidth-intensive applications began to push DSL and cable providers to increase their speeds. DSL was able to get to 5Mbps in many areas and they are now advertising speeds up to 40Mbps. Cable companies, were able to get to 300Mbps in many areas. WISPS marched right along with new Wi-Fi and proprietary protocols. Basically, as the party went on, the guests just kept ordering more food and bigger drinks.

Satellite companies were like the +1 guest invited to the wedding. They really didn’t know anyone, sat in the corner all night nursing their drinks because they didn’t have much to bring to the conversation, but occasionally another +1 would come over and talk to them. They were falling behind in the conversation until one of the +1’s, a B-actor from a TV show, ended up becoming Excede. Then people started paying attention until they realized that the actor couldn’t talk to everyone at once, so they went elsewhere.

In the meantime, the cellular industry had a bunch of conversations going on in one corner of the party. The catch, though, was none of them could hit the dance floor where the real action was. They owned the gossip, the political discussions, and the sports conversations, but couldn’t quite bust the move, at least until the government gave them their own space on the dance floor and they learned the LTE shuffle.

Fast forward to today and the party has gotten so big, everyone wants in. That means more people, like Google and Facebook, are slipping money into the hands of the bouncers at the door and I’m pretty sure nobody sent them an invitation. But when Google comes to the party, they make the party accommodate them so they just got the owners to add another door. At that same time, Facebook is talking about coming in, but they are sitting in a car on the curb with the window down trying to decide if they should get out. Fortunately for WISPs, the big boys don’t want to drive to a country barn and have a hoedown; they want to stay in the big city. The cellular carriers though, are looking at having a good old barn raising party. I could go on with DSL providers wanting to take billions in tax dollars to wipe out their country WISP brethren but that just goes without saying in the era of T-Tommy Wheeler.

With all that happening and WISPs needing to move into the big city for their next phase of real expansion, how can WISPs possibly compete against companies that have government-sanctioned monopolies and even keep private planes on standby for the politicians they own? AT&T wants to buy Time Warner for $80 billion dollars! I don’t know about you, but I’m pretty sure that AT&T could buy my company with the money they spend annually on coffee stirrers in their break rooms. For the average WISP, the landscape seems to be looking pretty dark, like a skit from Hee Haw. The smaller players could be getting squeezed worse than a tube of toothpaste. I’m here to tell you that it’s not going to happen.

Yeah, Eric Schmidt could probably buy a country with Google’s income and he has probably bought our government. But fortunately for us, Vivent proved that it takes more than money to get into the bandwidth game with their epic failure. And fiber fanatics like Google, government agencies, and various municipalities showed us that customers simply aren’t willing to pay the higher monthly fees necessary to get speed that they don’t really use. It seems that cable, DSL, and even satellite are providing sufficient speeds for way over half the country. For that, you can thank your economy which has been growing so slow that my money is on the turtle overtaking it. Add to that the record number of people out of the workforce and on either fixed income or government subsidies, the loss of high-paying jobs in manufacturing as companies offshore production, and the record number of immigrants coming in on public welfare. The concept of “Build it and they will come” only works in the movies. Google built it and found out nobody came.

Big money behind a venture though, means you have a lot of options and can afford to make lots of mistakes. So when Google saw that wireless technology was a far more effective means of delivering a cost-effective service instead of fiber, good for them. Naturally, they went out and bought a wireless company as quickly as I would buy a Wendy’s Triple in the drive-thru. Then, they added a couple of thousand employees, integrated their government puppet control division to get T-Tommy Wheeler to make some quick regulatory rule changes, and voila, they are in the WISP industry.

I’m all for competition. I say bring it on as long as you play by the rules of the free-market. And those rules say you should be profitable at some point, something Google Fiber has yet to achieve. I suspect that if they use that same mentality with wireless, the results will be the same. Unlike WISPs though, Google has multiple revenue sources from things like advertising, meta-data collection, and other sources that WISPs don’t have so their model will be slightly different. However, and I’m not going to get into it here, I believe they are making some critical mistakes early on that will not only make it difficult to compete against existing competitors, it will make it even harder to compete in certain, and I mean, the vast majority of environments. That means that there is a hole big enough for WISPS to drive an installers’ truck though and we need to pursue it.

Oh yeah, the cable and DSL providers are still there. But here is a fact: DSL is dead and cable is too expensive. Even when cable providers try to put in fiber, the speed may go up but the costs are the same or higher. There is nothing in the business plans for either of these providers to reduce prices and they need to spend billions of dollars (hopefully not taxpayer dollars) to keep them competitive on multiple levels.

Ahh, but what about the satellite industry? They are still a niche product today but I’m sure they want to come play with the big boys in suburban areas. For that to happen, at least one thing has to change: unlimited use in some areas and lower prices. At the same time, their playground is a lot bigger than every other company out there and they don’t have to fly balloons and drones with expensive technology to keep the Internet running.

Industry analysis like this is very interesting to me because it’s like coaching a baseball team. There are so many variables, random events, and bad bounces that can change things almost immediately, it’s never boring. Then you not only have to worry about the game you are playing and what you are going to do 3 innings from now, but you also need to think about who is pitching the game tomorrow. If you are a major league club, have to keep track of who you have coming up in the farming system that might be on your team three years from now. Now add in your scouting reports on every other team and what they might be doing against you. What I’m trying to say for WISPs is to look not only for the opportunities you have today, but where you need to be three years from now against the changing landscape and the inevitable differences in the competitive environment. Believe me, the opportunity is even bigger than you may think and more players in the game can be used to make you look that much better.

Two years ago I wrote a spreadsheet with integrated logistics to understand if a WISP could expand nationwide, hit at least 1,000,000 clients, what it would cost, and if could it be profitable. The good news was that not only could it be done against all current competitors at the time, the profit numbers were insane and that was the conservative estimate. Then I started micro testing the concepts that would need to be successful for it to work. The data we collected, both technical and marketing, showed that most of the assumptions were pretty accurate, especially with new equipment coming into the market. The analysis showed that it was more profitable, we could cut costs significantly, improve the quality of the product, and that we would be better positioned to defend that profitability and market share. The reason I say that here is because as a WISP, the opportunities you have today to compete against not only what’s out there, but what’s coming next, is YUUUUGE!

Don’t be dissuaded by all the headlines and big company announcements. What’s important is what happens in the trenches where the real people live. Listen to them, understand what they really want, and give it to them. They don’t care how they get it, they may not even understand what they want, but they do know what they need and what they are willing to pay to get it. When people want something, they turn to their friends and neighbors first. There is a reason the State Farm slogan is “Like a Good Neighbor….” The manufacturers have given you the tools for the next three years already and I know they are working on more. Be a good neighbor, put those tools to good use and start dominating your markets.

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