Business

MIPPS, Inc.

Sometimes you don't know exactly what you've got until someone comes and asks if they can buy it. That may turn out to be the case with all the expertise and infrastructure wireless ISPs have been building over the last few years. At least, it would be nice to think so.

by Gerry Blackwell [September 19, 2001]

It certainly looks like this is the case with MIPPS Inc., a four-year-old Toronto-based wireless Internet service provider (WISP). A family business run by the twenty-something sister and brother team of Sharon and Ron Prizant, MIPPS has seen modest but undeniable success.

Now it's hoping to trade on that success, and on its accumulated knowledge.

The company operates 10 points-of-presence (POPs), mostly in under-served commuter towns north and west of Toronto. It targets small and medium-size businesses, offering wireless Internet access and LAN interconnections from 1 to 100 Mbps. The firm uses 2.4-GHz and 5.8-GHz frequency-hopping gear.

MIPPS revenues shot up by 512 per cent between 1998 and 2000. They climbed over $700,000 last year. Since May 2000, when it hired its first sales employees, the company has grown its customer base from 25 to 140.

And, oh yes, it's profitable.

Now MIPPS is in "an expansion phase," according to president and CEO Sharon Prizant, looking for outside money for the first time. It should get it.

In fact, MIPPS' ship may be about to sail into port.

Wireless profit system
The first indication of that actually came two years ago, when the company only had 20 customers and four employees, and president and CEO Sharon Prizant was a still green 27.

A major carrier—she won't say which one—came sniffing around looking for an acquisition. Prizant was frankly stunned. What would a big, deep-pocketed corporation want with a rinky-dink company like hers?

Before Prizant sent them packing, she asked and they told her. "It was the knowledge we'd accumulated about what can happen with wireless," Prizant says. "All that knowledge we've compiled is invaluable."

She thinks it's entirely likely she'll be approached again about selling out. "I would say our company could easily be picked up and built in [to some large ISP] as a wireless arm."

Prizant is pretty sure she'll turn down any suitors, though. She and younger brother Ron, 23, have put a lot of work into the firm and want to keep going, she says. Besides, selling out may not be the only way to take it to the next level.

Two Tier 1 wireline ISPs are now considering proposals from MIPPS to provide T-1 class and higher local loop service in markets where the incumbent Bell Canada is the only other game in town.

Prizant is confident one or both will buy. The business case, she says, is a no-brainer.

One of the two ISPs, for example, wants to provide service to a dozen clients in one poorly served city near Toronto. Wireline costs to do it include $13,500 to $20,000 each to build fiber to the customers' facilities. And then $625 to $975 a month to Bell for T-1 service.

MIPPS can offer a wholesale rate for T-1 service of less than $275 a month—and there would of course be only minimal capital costs to establish the links.

"It's a huge opportunity," Prizant says. She means both for her and for her prospective customers.

"It's an area nobody has been able to compete in until now. Bell was the only one that offered service in remote areas. Now there's this cheap reliable alternative in wireless. It would be ridiculous to turn it down."

Maybe, but big Tier 1 ISPs got that way by being cautious and doing their due diligence. Wouldn't they be a tad wary of relying on such a dinky little company?

Rooted in loyalty
Prizant admits it has been a long haul just to get a hearing from the top decision makers at the two companies, but no one so far has expressed concerns about MIPPS' ability to follow through, she says. Or not to Prizant's face anyway.

She attributes this in part to the fact that the prospects have talked to her customers who are very satisfied and very loyal. Then there is MIPPS' solid 99.7 percent uptime guarantee.

The two ISPs should also, she says, be impressed by her company's achievements to date. MIPPS was recently selected by Profit magazine, a Canadian version of Inc., as "one of the hottest Canadian start-ups for 2001."

And just succeeding—on however modest a scale—where other much richer wireless enterprises have loudly failed is a testament to MIPPS' solid business values, Prizant argues.

Her observations about the reasons for the failures of the Teligents, Winstars and Maxlinks (a Canadian LMDS service provider) are not terribly original to be sure, but true enough.

Those companies, she says, made the mistake of spending gobs of cash building networks in the hope and expectation that "they would come." When they didn't, there were huge losses.

MIPPS, by way of contrast, has built its network a POP at a time. Before it sets up a new point of presence it presells so that it starts with a few customers. Then it concentrates all its sales and marketing effort on that one market area until it's profitable.

And only then will it launch a new POP, using revenues from the others to fund the expansion.

"It makes for slower growth," Prizant concedes. "In the end it means our company will grow the way companies used to grow. But that's okay because we're not in a dot-com economy anymore."

Real customers, real service
The other thing that sets her company apart, she says, is customer service. Well, we've heard that one before. But one piece of the MIPPS customer service ethic is impressive.

When customers sign up, they get a list of pager numbers for MIPPS technicians. They can call any time of the day or night and get a direct response by phone within five minutes, Prizant claims.

"With anyone for whom the Internet is a vital tool, that is really important," she says. "I know when we have to report a problem to our service provider, they open a ticket and it can take 24 to 48 hours to get a response. Our customers can page a technician who will deal with the problem right then on the phone."

Still, why wouldn't a big Tier 1 company just build its own wireless infrastructure? Simple, says Prizant. "They don't have the wireless knowledge."

If it really is that simple, if Prizant's and her company's hard-won knowledge of wireless is that rare and valuable, if Tier 1 carriers do start buying from company's like hers, it should be a huge morale boost for small and medium WISPs everywhere.

We'll keep you posted on whether MIPPS actually brings home the bacon.

—End

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	[Aug. 16, 2001]	Wireless in the Wild
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