February 21, 2008

And Now This Commercial Word

By Jim Barthold

Towerstream, a fixed wireless Internet provider operating in New York City, Los Angeles, Miami, Chicago, Seattle, San Francisco Bay area, Boston, Providence and Newport, R.I. is a happy and profitable company these days, thanks to its decision to deliver 8 Mbps symmetrical throughput to small-medium businesses (SMBs).

"We have hundreds of (customer) references; we're a public company on the NASDAQ; we have plenty of money in the bank," crowed Jeff Thompson, Towerstream's CEO.

Driving all this success, even in a down economy, is Towerstream's ability to target a "niche" market with a pretty fat pipe for a reasonable price ($999 a month). The pipe fits between the 3 Mbps or so that comes from two T-1s and the expensive 45 Mbps that's available from a DS-3.

"We're the only company that can serve this broadband gap that the legacy guys have handed to us because they have this problem with their infrastructure," Thompson said. "Small-medium guys are doing more and more online ... so bandwidth and reliable bandwidth for the last mile is very important. But the fiber guys, the ones that actually connect you to the Internet like small-medium businesses need, are not in that many buildings," he said.

Then there's cable. During its fourth quarter/year-end earnings call last week, Comcast CEO Steve Burke admitted that the push into the SMB space was not going as quickly as he'd like.

"2007 has been about putting the new building blocks in place for this business," Burke said. "We estimate there are 5 million small-to-medium businesses in our footprint that spend $12 to $15 billion in telecom service. Our goal is to capture 20 percent of the market and build a $2.5 billion business by 2011."

In the meantime, though, the space is heating up. Verizon, for one, is talking about taking its residentially based FiOS service into the SMB space, and other competitive local exchange carriers (CLECs) are eyeing the market as well. Comcast is just getting started.

"If you look at some of the other cable companies, they have commercial businesses that are much bigger than ours, even not adjusted for the fact that we're much larger," Burke said. "I'm getting impatient that it's not ramping faster. It really is starting to move, but not as quickly as I wish it was."

Which, Thompson said, is fine with Towerstream.

"We never run into cable," he said. "They never wired all the business buildings; they just wired the homes. I don't remember a sales manager ever coming to me for a special discount to beat a cable company."

- Jim Barthold