The SkyWeb Alliance

By Gerry Blackwell

March 25, 2003

If local WISPs can learn to reach out from their local areas to create regional alliances like the SkyWeb Alliance, they may be able to compete with the RBOCs on a statewide or even national scale.

If you're a wireless ISP, says Scott Redman, "Coverage is king."

That's why Redman, vice president of sales for San Diego-based SkyRiver Communications, Inc., initiated talks earlier this year with two other California WISPs, resulting in the formation of SkyWeb Alliance, possibly the first coalition of its kind in the wireless access industry.

The other two WISPs are Fremont-based NextWeb, Inc. in the San Francisco Bay/Silicon Valley area and SkyPipeline, Inc. of Camarillo which boasts 220 miles of coverage in the central part of the state between San Luis Obispo and Los Angeles.

 

Let's agree to agree

Under the agreement, the partners will wholesale capacity to each other, harmonize at least some of their offerings, co-market the SkyWeb brand, and collaborate on developing best practices guidelines for all to follow.

"I think it's a really, really good thing for the industry," says broadband access analyst Lindsay Schroth of the Boston-based Yankee Group.

The main benefits, Schroth says, are that the alliance will have increased buying power, it will be able to attract larger resellers, including big-league partners such as cable and telephone companies, and it should raise the profile of wireless access among prospective customers.

The members see the same benefits but the big one as far as they're concerned is summed up by Redman: coverage is king. The more wireless coverage you have, the bigger your market universe and the bigger the business opportunity.

And being big is important for a number of reasons as pioneering start-ups like these three hit their stride and look to take a serious crack at traditional wireline competitors.

Each SkyWeb Alliance member now has a much, much bigger coverage area. Each can sell to clients in the others' territories. The network, with 90 wireless POPs, stretches from just north of San Francisco to just south of San Diego.

"The areas we cover are home to 66 percent of the businesses in California, which is the fifth largest economy in the country," notes David Williams, vice president of marketing and business development at NextWeb.

"There's a lot of opportunity there. In the past, when opportunities would come to NextWeb, we would often have to say, 'Well, we don't have service in those areas.' We don't have to pass on those opportunities now."

 

Wholesale vs. retail

The members sell each other capacity on their networks at wholesale rates. It's unlikely any would ever poach on another's customer list. Even so, the notion of letting other companies sell in your territory may sound a little like inviting the thief into your house. It's not the way the alliance partners see it, however.

"I think I speak for all three of us when I say I hope they sell the living heck out of my area," says Redman. "My margins are going to be the same anyway. We're hoping it's a huge win-win for them."

Redman may not quite be speaking for all three, though. SkyRiver, unlike NextWeb and SkyPipeline, is a wholesale operation. It sells only through resellers. The others sell direct to small and medium-size businesses (SMBs). But under the alliance, that will change.

"It's serendipitous that one of us was wholesale and the other two retail," says Eric Warren, director of marketing and business development at SkyPipeline. "It means we can teach each other, because we'll all be doing both now. When you combine the genetic material from the three companies, what you get is greater than the sum of the parts."

"I have primarily a direct model," Williams notes. "But it costs me a lot. If SkyRiver or SkyPipleline sell a circuit -- however I get the revenue or the circuit online, I don't care."

 

Welcome to Wi-Fi California

The other big advantage the members see is that by combining their marketing efforts and being able to present a state-wide brand, they'll be able to get the message out about wireless access more quickly and more effectively. None of the three on its own had the resources to open up the whole state or make a really big splash in the target SMB market.

"If we had the ability to come up with a huge marketing campaign and do all the marketing ourselves, that would be one thing," Williams says. "But it's just not realistic. By working together, we can pool our collective resources and apply them to going after a much bigger untapped opportunity."

Reprinted from ISP-Planet.

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