Fixed Wireless Business

The Peoples Hero — continued

Peoples today
Today, Peoples covers about 1,500 square miles and serves slightly fewer than 100 customers with 15 meshed tower sites. Backhaul is handled by a T-1 and two commercial DSL lines (6 Mbps down, 1.5 Mbps up) at three different points of presence (POPs).

The enterprise has been profitable most years, though just barely. Capouch refers to his share of the profits as "a little spending money at the end of each year."

Customers pay a flat rate of $40 a month for service. There is no rate limiting. The way the company deals with bandwidth hogs is in keeping with the grassroots philosophy behind Peoples.

"We talk to each of our customers at the point they sign on with us and we talk about the notion of community," he says. That's the carrot, then there's the stick.

"We basically tell them that we watch every connection and who uses it, and if somebody's use of our bandwidth becomes such that it's inhibiting people who are on that same POP, then we reserve the right to ask them to find another ISP—which of course they can't do generally, so everybody plays nice as a result."

Much has changed since Capouch and his partner began their little project. Back then, the telcos weren't interested in serving rural areas with broadband. Partly as a result of his modest success, he suggests, they did start to move into some areas where Peoples otherwise might have found customers.

The company will stay small—if it survives at all—for that among several other reasons. Some are situational. "We don't have very much customer density," Capouch points out. "And another problem is we don't have a marketing arm."

Neither partner is interested in adding a marketing arm, though. It would mean growing to that next stage and actually hiring others, a commitment neither is willing to make, mainly because they both have professions that Capouch describes as "80-plus hours [of work] a week."

"The biggest problem is that we're at a size where it's a big pain in the butt to maintain this thing, and we don't make enough money," he says.

Problems abound. One of the biggest is rural electrification, which is not quite as reliable (big understatement) as city power. An ice storm in mid-December took power out for four days, for example. And Capouch claims parts of New Hampshire lost power for well over a week about the same time.

"So you get days when you can't do anything, you just sit on your hands," he says. "We can't afford to maintain redundancy and put generators in and things like that, just because we don't have enough customer density in each of our sites."

Offering customers "five nines" of reliability is out of the question. Most are understanding, he says.

And then there's the lightning problem. Despite grounding everything and using lightning arresting equipment, the Peoples towers basically act as lightning rods—in a very lightning prone area. Capouch estimates the company suffers an average of five hits a year that require swapping out damaged equipment.

Weather and power-related problems might only get worse. "The weather is changing," Capouch points out. He means as a result of global warming. As an example, he says, there were five lightning storms in the region last January.

"No one alive around here can remember seeing lightning in January before."

The grid
It was the threat from a collapsing economy that got one of Peoples' customers, a big-time farmer who relies on the service for mission-critical applications, wondering about what would happen if the rural power grid became even less stable.

With People's cooperation, he experimented with running the POPs on his own properties using marine batteries, driving from site to site replacing spent batteries with recharged cells. He found they could keep the network running for three days at a time.

"So it turns out the network could basically be kept in the air without the need for the local power grid—albeit with this alternative of having to run around with batteries every few days," Capouch says.

He insists he's not a "doomsdayer," but also says it's not difficult to imagine scenarios in which infrastructure in the United States could begin to fail, especially in sparsely populated areas.

One other reason Capouch and his partner are hanging on, despite the problems and the grind, is that both believe another environmental change—this one to the regulatory environment—could make Peoples a "much more valuable asset than it is today."

It could in fact become a needed alternative to incumbent phone companies become suddenly rapacious as a result of further deregulation of the telecom industry.

Indiana is leading the way, he says, in a move to make it possible for incumbents to become completely unregulated. They only have to prove they provide broadband service to 50 percent of customers in their coverage areas.

With rate regulation gone, will they suddenly jack up prices for rural phone service?

Capouch admits he hasn't done enough research to confirm absolutely that the state legislation due to come into force July 1, 2009—for which telcos lobbied vigorously—will make this possible. But he believes the incumbents will inevitably do whatever is in their best interests, and if that means hiking rates way up to offset the high cost of rural service, they will—if they're allowed.

What can Peoples do?

The company already operates what it calls the IP Telephony Club, a core group of customers that participate in a VoIP-based toll-bypass scheme. The system uses open source Asterisk VoIP interfaces in selected customers' homes and offices to route expensive inter-LATA long distance calls over the wireless network.

The Asterisk server automatically identifies the exchange dialed as long distance, converts the analog signal to digital, sends it over the Peoples wireless network as voice packets to another customer's site in an exchange where the call destination is toll free. From there, it goes back out on the public switched network over that customer's telco line.

This eliminates most tolls. Club members divvy up the minimal remaining charges on a monthly basis. It's the same kind of approach tried several years ago by Jeff Pulver's VON organization with its Free World Dialup (still operating) and the Gizmo Project.

Peoples would have rolled out the IP Telephony Club solution as a commercial service but Capouch's partner is worried about legal liability issues.

The network configuration means users can make calls that look like they're coming from somebody else's phone. What if somebody uses this facility to make harassing or otherwise illegal or actionable phone calls? The person whose phone line is used to deliver the call to its final destination could be in trouble.

"He's just a little nervous about it, and I understand that," Capouch says.

But that concern might evaporate if the new legislation has the effect he fears and local telcos start gouging customers for rural phone service. The partners are already maintaining Peoples "more as a public service than as a business," he says.

Much remains unclear about the impact of the new legislation, however. For one thing, the growing ubiquity of cellular networks, even in the countryside, could rob the local telcos of their monopoly just at the point where all regulation on rates is effectively removed—which means they couldn't raise prices very far without losing customers. Capouch and his partner will hang on at least until July to see what happens. In the meantime, "We're definitely filling a niche," he says, "because there's no other way for those folks to get broadband."

—End

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