Heat, Water...and Wi-Fi - Page 2

By Gerry Blackwell

March 01, 2004

It now has a deal on the table that would see it put wireless networks into 360 shopping malls across the country, to provide both hotspot services to shoppers and business services to tenants.

Easley is also enthused about the related notion of "hot lots," the idea of deploying Wi-Fi networks to cover parking lots at shopping malls -- or at other venues -- where business people on the road could pull in briefly to get broadband access to the Net for e-mail or tap into the corporate intranet.

Apartment buildings will remain the core of the business, though, he says. EdgeFocus has gotten the technology side down to a fine art. When it first started, the capital cost for each building was over $80 "per door" -- for each rental unit covered. Today it costs EdgeFocus only about $40 per door.

It takes about one access point for every 20 units and sometimes repeaters and 5.8-GHz point-to-point links to connect subnets.

The buildings EdgeFocus is in range in size from about 150 to over 1,200 units. There are over 90 APs in its largest installation, which Easley believes is the single largest non-campus Wi-Fi deployment. The company installs mainly equipment from Wi-Fi infrastructure vendor smartBridges.

The strategy initially was to go into an MDU and install a network that covered the whole building -- or at least 90 percent of it. Now EdgeFocus is starting by lighting up 30 to 40 percent of a complex, and adding infrastructure only as it sells service in other parts of the building.

It can go this less capital-intensive route now in part because of the easy plug-and-play scalability of smartBridges-based networks, Easley says.

The company also began experimenting recently with a different business model. In some cases, it's signing deals in which the building owner pays EdgeFocus a management fee -- typically less than $10 per unit -- for every unit in the complex. EdgeFocus builds the network and provides the high-speed Internet service free to tenants.

"It actually gives us better margins," Easley says. "And you don't have that ramp-up period [waiting for the revenue stream to start flowing as subscribers buy the service]."

EdgeFocus believes it now has a workable model for the apartment building business. It took some experimentation with technology and contract terms. More important, it took a lot of "business development."

"There's no secret sauce to a lot of this," Easley says.

The company worked diligently at building business relationships with the REITs, and that effort is now paying off, he says.

It wasn't always easy. Many REITs are gun shy after having hooked up with DSL providers who offered similar services. Many of the DSL companies "promised the earth," Easley says, but based their promises on unworkable business plans that too often didn't work out.

"A lot of the time the REITs got the bad end of the deal, so they really aren't jumping at this right now. Still, we've been able to create some good relationships."

Now, he believes, if the company can just land some additional financing, it can move to the next level. Easley brought Jeffery R. Hultman on as chairman and CEO. Hultman, an experienced big league telecom entrepreneur who founded companies he later sold for billions, brings added credibility. It will come in handy as EdgeFocus enters a tough and very competitive capital market.

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