CHICAGO – Two companies have succeeded in utilizing pre-WiMAX technology to build successful businesses that target different customers in the United States.
TowerStream and DigitalBridge Communications have carved out their own markets by being fixed pre-WiMAX service providers.
TowerStream has targeted the enterprise sector in large cities. DigitalBridge has focused on the consumer market in rural areas of the country. Officials from both companies said in interviews at last week’s WiMAX World 2008 event in Chicago that they are excited about Sprint Nextel Corp.’s launch of Xohm mobile WiMAX in Baltimore. Officials also say they have no plans to compete with the industry giant.
Biz angle
In 2000, Jeff Thompson started TowerStream with money from a small group of investors and fewer than 30 employees. The company is now traded on Wall Street and has more than 200 employees. The company went public last year when $55 million was raised in investments. TowerStream provides Internet services through its wireless broadband network. The company targets small to medium businesses that have between five and 200 employees. The company first launched its service in Boston in 2001, and now serves eight other large markets across the United States.
“We have been able to get people to switch off Verizon and AT&T because we are half the cost,” Thompson said.
TowerStream has used a basic business model to grow its business. It targets cities with large numbers of medium to small businesses. It then builds the network and then fills it up with customers.
“If you don’t fill up a network with customers, then a company is headed” for bankruptcy, Thompson said. “We get a network up and running and build our sales force. We then fill up the network and then go the next market.”
The company has repeated its business model first established in Boston in New York City, Chicago, Miami, Seattle, Los Angeles and San Francisco. The Dallas-Fort Worth area was added earlier this year.
Thompson said a key reason for the company’s success is it has been able to build its wireless networks on towers placed in key areas of the various cities. The company has been able to install its WiMAX base stations on towers in such places as the John Hancock building in Chicago and the Empire State Building in New York.
The company has also gained additional business from the companies it serves. Thompson said 25% of new customers are gained through a reference.
Thompson said the company will continue with its current business model.
“We sell large pipes with a high quality at a low cost,” he said. “The hardest thing to do is to stay disciplined and do one thing very well. We have been doing this for eight years and our customers love it.”
Consumer focus
In 2005, Kelley Dunne started DigitalBridge after working with Verizon Wireless for a number of years. He started the company out of the basement in his home and three employees. The company now provides wireless Internet service in 15 markets and has raised $40 million in equity and debt.
“I saw the potential with WiMAX to serve small areas with limited Internet access,” said Dunne, president and CEO of DigitalBridge.
The company now employs 90 people and is planning on expanding to additional markets. Dunne said the company’s goal is to serve a total of 60 to 80 markets in the next two years.
The company claims 225,000 customers in small markets that include, Jackson Hole, Wyo.; Sioux Falls, S.D.; and a handful of markets in Montana and Idaho.
“We are in areas where Clearwire Corp. is not going to focus on,” Dunne said.
Dunne said pre-WiMAX technology allowed DigitalBridge to compete in markets where limited Internet access is available.
“What people forget to understand is WiMAX is a portable solution,” he said. “There is huge opportunity in these small markets that have not been served by the large telephone companies.”
Xohm good for business
With the launch of the Xohm service in Baltimore, Thompson and Dunne said the first mobile WiMAX launch will heighten awareness that the technology is a viable third option for Internet service.
The launch of Xohm “will bring credibility to the marketplace,” Thompson said. “It is only going to help with customer acceptance. It is very positive that Sprint and Clearwire have their first market up and running.”
Dunne said if Xohm succeeds, the entire ecosystem stands to benefit.
“Our early success gives me tremendous confidence Xohm will be successful,” he said. “It is good for the industry to look at what we have done.”
WiMAX to benefit from Wi-Fi
WiMAX technology will increase in the consumer and business sectors once personal computers and other wireless devices are equipped with WiMAX chips, Thompson said.
“In the future, I think that everything that is equipped with Wi-Fi, will have WiMAX in it,” he said.
