Fixed Wireless Business

SkyBridge's Wireless Gambit

Las Vegas, which is surprisingly one of the fastest growing cities in the country, seems to attract, chew up, and spit out fixed wireless entrepreneurs. Meet a two-time player in the market.

by Gerry Blackwell [November 12, 2002]

By our count, SkyBridge Wireless, which launched its wireless Internet service operations in Vegas in August, is at least the eighth company to do so in the past few years. Some have disappeared, others are struggling, none is wildly successful.

So why would another group of entrepreneurs take the gamble, especially right now in the midst of an economic and telecom industry downturn?

President and Chief Executive Officer Jason Neiberger and partners Jeff and Matthew Ladue figured they could learn from past mistakes. They were the founding engineers who built the network for one of the dear departed Las Vegas WISPs, LANwaves.

They claim they have learned from LANwaves miscues, but more importantly, they managed to hang on to crucial business contacts they made there, especially in the casino industry. Everything in Vegas, it seems, eventually comes around to the casinos.

Regional draw
The geography of the city—flat and largely treeless—is generally ideal for fixed wireless, which is perhaps one reason why so many wireless service providers have come here.

"It's easy to put up a single access point and cover quite a few areas without having hills or trees blocking you," Neiberger notes. "The only problem is that the [casino] strip divides the city in half."

The casinos are also the highest buildings for miles around. This makes them prime rooftop real estate for fixed wireless operators. But a lot of WISPs have found it difficult to get a foot in the casinos' doors, Neiberger says. That's one of SkyBridge's aces: it has access to casino roofs.

Not that the company is looking to freeze out competitors – even if it could. In fact, SkyBridge has worked with other wireless service providers in the city, sharing hard-won casino roof space.

As Neiberger says, "This is a growing and expanding market. There's plenty of business for at least a couple of wireless service providers." A couple, perhaps, but there are at least four operating in the city.

Still, according to Neiberger, Vegas is the fastest growing metropolitan area in the U.S. The population is already over 1.5 million, with 7,000 new residents reportedly coming in each month. They're attracted by thousands of new jobs being created, especially in the high-tech sector.

State tax laws make Nevada a good place to locate a business operation. And workers are attracted not only by the jobs but the sunny, warm climate and low, low real estate prices. A family relocating from Washington or San Francisco could sell their home for four to five times what they will pay in Las Vegas, Neiberger says.

He came eight years ago. That makes Neiberger an old hand—something that works to his advantage. Local businesses like working with local businesses, he says. The relationships he and his partners forged in past lives in Vegas, at LANwaves and earlier, still pay dividends.

Decked out for business
SkyBridge is also operating in nearby Henderson, a separate and almost equally fast-growing community with a population of about 250,000.

The company will stay in the Las Vegas area for the time being, Neiberger says. Now is not the time to try and fund a large expansion. What it will do is offer its engineering and wireless network design expertise to WISPs in other parts of the country, he says.

For now at least the company is exclusively focused on selling to the hundreds of small and medium-size businesses in the two Nevada cities. It offers high-speed Internet access services ranging from 256 Kbps for $99.95 a month to T-1 for $449.95.

The installation fee is a flat $300. SkyBridge will also quote on point-to-point links from 512 Kbps to 155 Mbps. The company boasts that installation can be done within 72 hours of receiving a signed order.

The core services are simple Internet access only—no hosting, e-mail or other value-added services for now.

"What we found was that a lot of customers that were in this market already had those services," Neiberger says. "They had Web hosting somewhere else or it was done in-house. Providing simple Internet access was also simpler for us. It allowed us to focus more on the quality of our service."

"As we continue to expand and grow, though, we will offer other services. More than likely they'll be included in our service rates to give a valued-added piece."

Going after the residential market is not in the company's gun sights right at the moment, but it is researching second-generation near line of sight fixed wireless technology and expects to make a move in the middle of the second quarter of 2003.

Odds-on coverage
SkyBridge is using two key tower sites on the roofs of the Rio Hotel-Casino—to cover the west side of the city—and Harrah's Las Vegas to cover the east side.

The company uses 5.8 GHz U-NII-band spectrum to shoot from these primary tower sites to hubs on two- and three-storey business buildings using Ultima3 series multipoint base stations from Wi-LAN of Calgary, Canada.

The hub sites serve tenants in the building itself and SkyBridge also uses them to distribute its services to other customers in the area using 2.4 GHz 802.11b technology incorporating KarlNet's high-performance TurboCell wireless network protocol, as well as Motorola's 5.2 GHz Canopy technology.

"They all have different ranges and capabilities," Neiberger explains. "Which technology we use depends on a multitude of factors, including the terrain and the application. For example, in certain areas if we're in close to another competitor, we'll probably stay away from using 2.4 GHz. If we have a client or business park that's a little further out, we'll use 5.8 GHz because it can go greater distances."

SkyBridge has a few competitive advantages, Neiberger believes. For starters, its prices are lower. This is for a couple of reasons. It built fiber directly from its main access points to AT&T and Cox Communications Internet backbones. This means it doesn't have to pay local loop charges.

Its installation charges are also about 50 percent below competitors, Neiberger says. This is partly because of the deals it gets on customer premises equipment by leveraging long-standing relationships with vendors and other WISPs. SkyBridge's cost per customer ranges from about $400 to $600, he says.

The other big advantage is the quality and reliability of the service. Unlike some of its local competitors, SkyBridge has a seasoned engineering team on the ground in Las Vegas. It offers 24x7 service and Quality of Service agreements guaranteeing up to 99.999-percent up time.

"We deliver better service, quicker, at a lower price," Neiberger sums up.

Betting on profits
That doesn't mean SkyBridge has it made in the shade, of course. The company is currently "working with" angels and venture capital firms to bring in more funding, though it can complete its current plan without additional capital, Neiberger says.

At the time of our interview, the company only had about 20 customers, although that was after just a few weeks of real selling—and Neiberger claims SkyBridge can break even with as few as 96 customers. He expects to do that within 12 to 13 months—and reach profitability within 19 months.

If SkyBridge manages that, it will have gambled—big time—and won. That's a pretty big if even for a high-rolling market like Las Vegas.

—End