Big, Sunny Side Up Wireless

By Alex Goldman

April 13, 2004

Dave Thayne is building something big and wireless in Utah -- and in Idaho, Arizona, Texas, and Nevada.

Dave Thayne, founder and president of Heritage Internet Services Inc. of Bluffdale, Utah, near Salt Lake City, is building what promises to be the biggest Wi-Fi Internet access network in the country, a series of massive hotzones that will cover all the significant population centers in the five states he's targeting.

Did we mention this was big? The question is, can he bring it off?

The company has been building its network for a little over a year and offering service since the start of 2004. It claims to already be the biggest wireless ISP in Utah and Idaho in terms of subscribers signed and access points deployed.

"We're just coming out of the chute now," Thayne says. "We've been quietly growing without too much fanfare. We didn't want very many people to know what we were doing. Now it's time to come out of the closet."

One reason for coming out of the closet is that the company would like to bring in some additional financing to help underwrite the enormous capital costs involved -- ultimately over $200 million to cover the five states, Thayne says.

"We don't need a lot of funding but it would be nice to have a little extra," he says.

The company does already have some outside money, but Thayne says that much of the initial capitalization came from the sale of marketing territories to entrepreneurs who are selling the Heritage service directly to end customers and keeping "the lion's share" of the revenues.

If this doesn't all quite add up, it may just be that Thayne isn't telling us everything. One senses he is not by nature a communicative person, and as much as he says it's time to come out of the closet, he's certainly not prepared to take his clothes off in public.

"I'd rather not go in to too much detail [on the role and function of the dealer/investors]," Thayne says. "It's the whole crunch of our business really and I don't want our competitors to know what we're doing." This gets to be a fairly constant refrain.

Thayne will say that the company is now shifting focus from selling small territories to small entrepreneurs to selling larger territories to larger investors.

The technology strategy sounds simple, perhaps too simple. Heritage is blanketing population centers with Wi-Fi 11a or 11g coverage by placing access points in a grid -- about one every mile -- using a combination of leased cellular tower space and assorted other rights of way.

The company is using the higher-bandwidth Wi-Fi standards because it intends to offer telephony and video-on-demand services over the network -- and not in the long term either. Thayne says Heritage will begin offering telephony service within a couple of weeks, video within 60 days.

"We're building [the telephony service] right now," he says. "It should be out in two weeks. We've got it in beta test and it looks really good. It's probably ready to go, but we'll give it another week or so."

Heritage is using mostly Cisco infrastructure equipment, in some cases modified in unspecified ways. The company also did custom integration of customer network access devices and antennas. "We are using some tricks, but I can't tell you them all or I'd have to kill you," Thayne says laconically.

Although customers initially need outside antennas to connect, when the network build-out is complete, they will be able to get by using indoor antennas only.

They will also be able to get a connection anywhere within the coverage area. They could use their service at home, at at an office and in public areas in between such as parks and even on the road.

By colocating with telcos, Heritage has built its own managed backbone network, which Thayne says reduced the cost of DS3s by a third over what other WISPs pay when they simply buy capacity on telco-managed networks.

The territory-wide backbone network allows Heritage to centralize authentication to its main network operations center (NOC). This means subscribers can use the service wherever Heritage has coverage.

So far it has about 20 to 25 percent of Salt Lake City and surrounding towns and cities covered, and will complete its rollout within the next three months, covering population centers in Utah comprising 1,006 square miles. Cost: $16 million.

In Idaho, Heritage is up and running in Boise, Meridian, and points east, and continues to expand. Within three to four months, the company expects to launch in the other three states with partial coverage.

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