Friday, January 23, 2009

The challenge facing WISPs

While fixed terrestrial wireless Internet service providers (WISPs) are well situated to pick up where DSL has derailed on the route to fiber to the premises (FTTP), their major challenge going forward is to provide users decent connectivity at an attractive price point. Especially as consumers and businesses become more frugal in the current economic contraction.

The challenge is evident in the case of one WISP that recently expanded into your blogger's area of El Dorado County, California. When I mentioned Central Valley Broadband in a Dec. 3, 2008 post, the WISP was offering 3 Mbs service to telco neglected SOHOs (Small Office/Home Office) at a relatively appealing monthly rate of $60.

According to the company's Web site, that's no longer the case. Now its best business plan offers 2 Mbs down and 1 Mbs up -- at the much higher price of $130 a month. A lower priced business plan at $90 a month provides throughput of 1 Mbs down and 512 Kbs up.

While some SOHOs might be willing to pay that price, it's likely to give pause to others and limit the company's growth prospects in the SOHO segment. Additionally, neither of these nominally businsess grade plans meet the minimum wireless connectivity standards of 3 Mbs down and 1 Mbs up established for California Advanced Services Fund subsidies or for grant funding under federal economic stimulus legislation curently making its way through Congress. Nor do any of the company's consumer plans, which start out at $40 a month for 512 Kbs down and 256 Kbs up and go up to $90 a month for 1.5 Mbs down and 1 Mbs up. The latter plan might barely support video downloads depending on the latency. But even if it proves adequate, late adopter residential users currently on dial up aren't likely to be motivated to pay nearly 100 bucks a month in order to watch YouTube and NetFlix video at minimum recommended throughput.

For WISPs hoping to pick up significant numbers of customers in the years before FTTP is widely established (and be perceived as a superior alternative to the crippled and costly connectivity of satellite Internet) their challenge is to offer services with both decent throughput and attractive pricing. Otherwise their growth prospects are severely constrained and self limiting.

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