Case Study: Global Wireless Goes Fishing
February 19, 2002
Cast your net into a rich niche market and your catch-of-the- day could become a profitable beachhead for your wireless Internet services.
Here's one potentially lucrative niche other WISPs and hotspot operators somehow overlookedmarinas. Think about it: they're places where rich, gadget-oriented people hang out.
It took yachting guys to see this opportunity and seize it. Global Wireless Services Inc., which has installed wireless access networks in over 50 marinas since early 2001, is the brainchild of Gerald Berton, chairman of Miami-based yacht importer and dealer Global Yachts International.
The idea was born out of Berton's frustration at not being able to get a cell phone line at big boat shows because such a high percentage of the upscale attendees had phonesmany more than oneand were using them constantly. If only, he thought, he could just send an e-mail.
The company uses 802.11b wireless networking equipment to offer unlimited T-1 access dockside and up to a couple of miles out from the marina for between $40 and $80 a month. The marinas are mostly clustered around New York-Boston and the central part of Florida's Atlantic coast.
Berton funded the start-up himself, but the company is now on the hunt for $15 million in venture capital to continue its build-out.
The market is certainly promising. Rosner cites a survey commissioned by one boating magazine that showed over 90 percent of yachters use the Internethe's convinced it's closer to 98 percentand that 70 percent of them use it every day.
"When they go off on a cruise," Rosner says, "they feel acutely out of touch."
He's not surprised at the high percentage of yachting Internet users. Yachters tend to be gadget people. "You don't own a boat if you're not capable of feeling some affinity for the mechanicals of a boat," he says. And people who like one kind of gadget often like others.
Or that's the theory. On the other hand, one factor that has slowed uptake is an apparent unwillingness on the part of target customersalmost exclusively recreational yachtersto learn another new technology, Rosner concedes.
The company has been marketing the service as something that customers can self-install. But it is now realizing it needs staff at each marina trained to do a little hand-holding, Rosner says.
He won't say how many customers Global Wireless has signed up so far. On the one hand, he claims response has been "huge" and "hugely positive." On the other, it's clear the take rate has not met initial targets.
Part of this is due to the seasonality of the yachting industry, Rosner says. Last year, because it didn't get the networks installed early enough in the season, the company missed most of its window of opportunity for marketing to northern marinas.
"This year," Rosner says, "we'll be hitting them early and hitting them hardwith preseason specials and other promotions."
In the meantime, Global Wireless continuesfor now at leastits aggressive build-out. It expects to have 250 marinas installed by the end of this year, and ultimately 1,900.
This clearly will depend on when and how much money it can drum up on the venture capital market. The company is well into the process now and Rosner claims to be "optimistic" about success.
While most of its marinas are clustered in the northeast and southeast, the company now has installations in Chicago and in the Los Angeles basin, from which it expects to build the Great Lakes and West Coast markets.There is also "huge demand" for service in The Bahamas, where most east-coast yachters end up cruising at some point in the year. The parent company has strong business ties in England and Italy because it imports yachts from those places, so it is also exploring opportunities there.
"But the reality is, the current [U.S.] plan will keep us pretty busy for three or four years," Rosner says.
At each marina, Global Wireless typically installs two to five access points linked by a wireless backbone. It is using all Cisco gearradio equipment, routers, bridges, servers, etc.
The network uses 128-bit encryption to authenticate subscribers. Unlike public hotspot operations, it's not interested in casual users. Customers have to sign up for at least a month.
If they're not registered users, Rosner says, even if they have a Wi-Fi card in their laptop, they won't be able to see the network.
"With our clientele," he says, "they're not going to use it for anything important unless they have some assurance their information is protected."
The rare marina is compact enough to get away with only one access point. At the other end of the spectrum are sprawling facilities such as the Miami Beach marina. It's about 40 yards deep and stretches almost a mile.
Global Wireless advertises its service as a dockside convenience, but in fact users can get access up to two miles out to sea, even with just a PCMCIA card. A boat with an antenna on the mast will keep the connection even longer.
By this spring, in some areas where it has concentrated clusters of marinas installedaround Palm Beach FL, for examplesubscribers will be able to cruise for several miles without losing a connection.
Or rather, without being out of range. In fact, there will be no hand offs between marinas.
This is deliberate. A second revenue stream for Global Wireless is advertising on marina-specific portal pages that pop up when a subscriber logs on. Marinas share 50-50 in the ad revenues.
If the networks were interconnected and did transparent hand-offs, the marina being handed off to would lose the opportunity to get its local advertising in front of subscribers.
But as Rosner notes, logging off one out-of-range marina and back on to the next one is matter of couple of mouse clicks and a few seconds. Global Wireless functions in effect as its own Tier 2 ISP. Its traffic is backhauled to Tier 1 ISP Cable and Wireless's POPs. So there are really no opportunities for local and regional ISPs to get in on the action by partnering with Global Wireless.
Working the docks
But are there any other opportunities for ISPs here?
Well, despite its strong head start on the eastern seaboard, Global Wireless is not strong yet on the West Coast, Gulf Coast or in the Great Lakes. And technologically, what it's doing is not rocket science. You could do it yourself.
If you operate a WISP in marina-infested waters, finding a yachting-industry partner might be the way to get started.
But one thing does occur to us. It's maybe true, as Rosner contends, that the apparently slower-than-expected uptake is down to correctable marketing factors.
On the other hand, though, maybe he's just wrong about Internet-savvy yachtsmen feeling "acutely out of touch" when cruising. Maybe they go cruising because they want to be out of touch.
This article originally appeared on ISP-Planet