October 10, 2002
Denver Post - Speedy access to Net expands Small startups offer metro neighborhoods broadband service

By: Jennifer Beauprez
Denver Post Business Writer

Thursday, October 10, 2002 - Consumers grumbling about a lack of high-speed Internet access may get relief from a new breed of startups marching into Denver-area neighborhoods.

While the 1990s nurtured cash-flush firms and grandiose plans, these companies take a markedly different approach in the down economy.

With names like Ricochet, WisperTel and Usurf, they're going where the competition isn't - homes that still cannot get DSL or cable modem service. And they are using grassroots and penny-pinching strategies to find their customers - going door-to-door, pitching services at homeowners-association meetings and partnering with other small firms.

Unlike the telecom ventures of years past, they don't have plans to take over the world.

"I liken it somewhat to the cable industry years back," said Doug McKinnon, chief executive officer of Usurf Inc., a startup that has rolled out high-speed Internet for $50 a month to homes in Cherry Creek, which has limited DSL access and no cable-modem access.

AT&T Broadband is spending hundreds of millions of dollars in metro Denver to upgrade its cable lines, but it may be two more years until every home has access to high-speed connections. Qwest Communications has also slowed its rollout of digital subscriber lines, which use copper phone lines to transmit data, because it is too expensive.

Neither company will reveal the number of customers it has in each market. But dozens of neighborhoods in metro Denver, stretching from Glendale to Evergreen and Lakewood to Ken-Caryl, cannot get access to either service.

That is despite huge local demand. The Cyberstates 2002 report found that Colorado ranked fourth in the nation for number of homes having Internet access, with 59 percent hooked up to the Web, and sixth in the nation for homes with computers, with 65 percent owning a machine.

Nationwide, small providers are popping up to fill gaps in high-speed Internet access, using 802.11 or wi-fi spectrum, which uses public airwaves that do not require a license from the government.

The equipment is fairly inexpensive and easy to install, but the service can be unpredictable because it requires a direct line of sight to the main base station, experts say.

Sprint Broadband nixed its plan last spring to use so-called fixed wireless because it lost too much money sending service technicians to install antennas for customers only to find they could not get a signal because of trees or buildings blocking the reception.

"There's definitely demand for broadband nationwide, and some innovative companies are trying it on a small scale," said Lee Doyle, an analyst with high-tech research firm IDC Corp.

"Ultimately the question is, can you make that profitable and charge less than $50 a month?" Doyle said. "It's too early to even say whether anyone is going to win at that."

Barry Pier, chief executive of startup Wisper Telecommunications Inc., wants to be one of those winners. Part of his strategy is to inspire neighbors to do his marketing for him.

Pier said his company can serve 340,000 homes and 31,000 businesses on the outskirts of metro Denver that cannot get DSL or cable modem service now.

But WisperTel won't provide wireless Internet service until at least 12 to 15 customers within a 3-mile radius sign up for the service. Neighbors who want the service must tell their friends.

Once enough people indicate interest on the company's website, wispertel.com, then WisperTel will start installing service.

WisperTel even plans to offer free $400 equipment and free $49 service to "host" users who put two antennas about the size of a sheet of paper and a walkie-talkie on their roofs, as well as a box that looks like a water meter on the back of their houses.

Pier is also pitching WisperTel at homeowners-association meetings and dropping brochures at communal mailboxes to sell its wireless service. The company plans to target residents in Evergreen, Conifer, Genesee, Lakewood, Morrison and Ken-Caryl.

"We gave one presentation to a homeowners-association meeting in Genesee, and we got 100 calls," Pier said.

Competitor Usurf is targeting homes as well as apartment complexes, installing an antenna on the building and then pitching to the hundreds of residents. Usurf also partnered with small competitive phone companies, such as SunWest Communications in Colorado Springs, to market its services and provide technical support.

CEO McKinnon said the strategy is far different from the go-go days of telecom, when he was a vice president at ICG Corp., the high-flying telecommunications firm that fell into bankruptcy.

"I've been down roads that haven't worked before," said McKinnon. "We're going to do it right and make sure the customer has the proper service."

Usurf, which promises subscribers speeds that are five to 10 times faster than a dial-up modem, charges $300 for startup equipment. It will target the Denver Tech Center, Ken-Caryl and the E-470 corridor after it gains more customers in Cherry Creek.

Mort Aaronson also employs a bootstrap strategy.

The CEO of Aerie Networks in Denver bought the assets from bankrupt Ricochet, the wireless company that once targeted business executives.

Aerie kept the Ricochet name and has been aggressively rolling out the service to Denver residents since August. To get the word out, Aaronson plans to put inexpensive ads on buses and hire college students to go door-to- door in neighborhoods that can't get high-speed service.

"You'll see us get pretty aggressive with the door-hanging campaign," he said. "It's like shooting fish in a barrel. There are people who want it and can't get it, so it's not hard to sell to them."