http://twincities.bizjournals.com/twincities/stories/2006/11/06/story3.html?t=printable
US Internet seeks 17 city Wi-Fi deals
After landing the contract to build a citywide wireless network for
Minneapolis, US Internet is setting its sights on cities nationwide.
The Minnetonka-based company, which beat out EarthLink and dozens of
other providers for the Minneapolis job, is angling to enter the
municipal wireless market in 17 cities.
That's a tall order for a company that's still a relative unknown even
in its home market, but US Internet has got some things going for it.
Through a partnership with Charys Holding Co. Inc., US Internet has
already landed a deal in Atlanta and is working on a pilot project in
Boston.
Charys, based in Atlanta, is doing most of the legwork on submitting
proposals to other cities, while US Internet focuses on Minneapolis,
said Joe Caldwell, a company co-founder and its vice president of
marketing.
"They're the elephant, and we're just kind of holding onto their tail,"
he said.
High-school friends Travis Carter and Kurt Lange started US Internet in
their apartment in 1995, and have steadily built the business over the
past decade. The Internet service provider now works in more than 2,000
markets and does other work, such as data backup, for several large
companies.
US Internet is just entering the municipal wireless market, which is
still young -- and risky -- but rapidly growing.
Hundreds of cities are seeking to develop networks that give residents
and businesses low-cost access to wireless Internet, but US Internet
originally had doubts about joining the movement.
"We were not very sold on it in the beginning," said Lange, the
company's vice president of operations. Municipal Wi-Fi initiatives have
faced legal and other challenges from critics who say cities shouldn't
be in the business of providing Internet service, a debate Minneapolis
partially sidestepped by its public-private partnership approach.
The city's deal with US Internet calls for the company to build and run
the Wi-Fi network in exchange for the city becoming an "anchor tenant."
US Internet and Atlanta-based EarthLink were the two finalists in the
bid to win the Minneapolis contract. US Internet is likely to come up
against large firms in the future, but observers say there's still room
for smaller companies to carve a niche in the market.
"That field is not narrowing yet," said Jim Farstad, CEO of
Minneapolis-based rClient who served as a consultant to the city of
Minneapolis on its Wi-Fi project. "There's some consolidation in the
industry, but not a tremendous amount."
US Internet was one of more than 90 firms to attend a preliminary
conference held for companies looking to respond to Minneapolis' request
for proposals, and one of six to ultimately submit a proposal. Despite
some strong competition, the company's co-founders said they never
viewed themselves as an underdog.
"This is our house," said Caldwell. "We do a lot of complicated,
sophisticated business. We have a Ph.D. in Internet."
Even as a small company, US Internet may be able to become a bigger
player in the market, said Esme Vos, an intellectual property attorney
who founded MuniWireless.com, a Web site devoted to the movement.
Vos said the company is one of a handful of regional service providers
pursuing municipal wireless contracts, and it's not the only smaller
company to team up with other firms as a strategy to get them. Mountain
View, Calif.-based MetroFi Inc., for instance, has partnered with AT&T,
and Azulstar Inc., based in Rio Rancho, N.M., has paired with Cisco
Systems and IBM.
Landing a deal with a large U.S. city such as Minneapolis also is a big
boost to US Internet, she said. It helps that the company's contract
with the city is a public-private partnership, a model being
investigated by more cities, she added.
"It's a really interesting way for them to market themselves," said Vos.
"They can say, 'we have a market, and the city is an anchor tenant; we'd
like to do the same for you.' "
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