Tom,
That's getting off the subject of this thread... if you bought 250 CPE,
you should have probably done your homework first... or purchased 30 and
installed them to make sure they worked for you. That's true with any
radio, any brand or any product. :)
Travis
Microserv
Tom DeReggi wrote:
We've been over this before, The cost for a CPE is not $149. I don't
benefit by reducing my CPE cost from $400 to $149, if My installtion
costs go up, and my maintenance costs go up, and I loose prospects
because the gear doesn't get the job done for what ever reasons
(interference resilience / Cosmetics / Additional mounting hardware /
Etc.)
By lowering the CPE cost, I now have less tangible products to secure
the funding for my company. A bank won't lend me money to cover my
maintenance, a cost that has no value or new income associated with
the expense. So why do I want to defer costs that could be leased
($500 quality radios), for expenses that can't be leased that take
valuable cash out of my pocket (Salaries for maintenance and such).
The fact is I can do an Alvarion CPE isntalltion in two hours, it
meets the cosmetic requirement and signal quality of 99% of my
prospects, so why would I want a $149 CPE, that didn't meet those
requirements for 90% of my prospects?
So the real numbers that are needed are business models that consider
a $500 per CPE cost (whats required to get the job done) to finance
through the leases. Its a tough call for $500 at residential prices.
The $149 CPE lease model is flawed, because the $149 CPE has to many
hidden costs that are not apparent to most WISPs until its to late and
the costs have been incurred.
The day the $149/CPE delivers what a WISP needs, the day I'll join
your campaign of how the $149 CPE saves the Wireless Industry. But
what happen to me is that I bought into the $149 CPE idea, made big
plans, and then cancelled them after the fact because I learned after
the fact it was a loosing business proposition. So what I really lost
was 6-9month of time to market waiting for something that never was
going to materialize.
Understand that this opinion, is based on my market and geography that
may be considerably different than yours. If you don;t have the same
barriers and the $149 CPE does the job for you, then it may be a
winner for you. But I'm done installing half assed equipment. I'm in
the business of selling quality and maintenance free solutions. I'd
rather identify the opportunity that is willing to pay for the quality
solutions. It takes so long to build a reputation, and it takes so
little time to ruin it.
Trango 2.4ghz CPE = $475 in single quantity
36 month lease on same CPE = $12/month = $432 total cost
So, even though I am paying interest for 36 months, the actual cost
of the radio is less, but I don't have to come up with money for each
sub that I install. Instead I am able to "run" the business from day
to day without having to "get over the next hurdle"
That I fully agree with. If you can finance for less than paying
cash, thats a good thing.
As long as after you bought $250 CPES, you didn;t realize that it was
gear that you didn;t want, and needed another type of gear.
If I bought 250 $149 CPEs 6 months ago, I'd have 250 CPEs still
sitting on the shelf.
Tom DeReggi
RapidDSL & Wireless, Inc
IntAirNet- Fixed Wireless Broadband
----- Original Message ----- From: "Travis Johnson" <[EMAIL PROTECTED]>
To: "WISPA General List" <wireless@wispa.org>
Sent: Tuesday, October 17, 2006 7:39 PM
Subject: Re: [WISPA] Are you making money?
Tom,
The idea is that you lease the CPE equipment. It costs you $5 per
month per sub (using $149 CPE), and you are breaking even on the
install. So from day one I am making money on the sub (and generating
positive cash flow). I can then use that money to grow the business
(more bandwidth, bigger routers, more towers, etc) and continue over
and over and over.
Also, because I can lease 250 CPE at a time, I am getting a better
price. Let's run some numbers:
Trango 2.4ghz CPE = $475 in single quantity
36 month lease on same CPE = $12/month = $432 total cost
So, even though I am paying interest for 36 months, the actual cost
of the radio is less, but I don't have to come up with money for each
sub that I install. Instead I am able to "run" the business from day
to day without having to "get over the next hurdle". I can pay good
salaries, have nice office space, etc. because the business runs cash
flow positive from day one with EVERY customer.
Plug the numbers into that spreadsheet that started this discussion
and see which business model you would rather own in 2-3 years. There
is nothing wrong with debt... you just have to manage it correctly.
Each lease becomes an "operating expense", just like bandwidth, tower
rent, etc. The best part is in 3 years, you own the CPE. Even if only
80% of them are still operating, that's 80% new CPE you don't have to
buy. ;)
For what it's worth, the "tax write-off thing" always gets me too.
People almost talk like it's free money or something, instead of the
70% expense it really is. :)
Travis
Microserv
Tom DeReggi wrote:
The problem with Leasing, is that you ahve to keep your clients
longer than your leases.
Historically, WISPs make logrithmic growth with each year having
more growth than the year before.
Usually the profit from old business (subs with paid off leases),
rarely covers costs of growth, as the growth in later years is so
much grander.
Sure leasing helps growth and makes the books look good. But what
happens in your last year? The one where you potentially could loose
all your subs?
The year that you just had your largest growth, and largest amount
of dollars on Leases for reoccuring liabilities. Will your business
then last 3 more years to pay off those leases?
The problem with Finance, is it gives people a fake sense of
success, and while deferring payment, it allows upfront moneys to be
spent more wastefully because it is there to spend.
There is always a grand plan of how that money will be used to
improve business, but do things always work the way they are
planned, and do you ghet your money's worth? There is something to
be said for the business man that believes in old fasion values of a
dollar earned and a dollar that can be spent, apposed to spending
tommorrows dollar today and deferring todays liabilties to
tommorrow. It order not to loose your butt leasing, one must
predict accurately the date of their end came, so they know when the
leases have to be paid off.
What if you aren't bought, as predicted at the end game? One of the
things I've learned is that when you are eating fat (money
available), people get lazy. When you are hungry and wondering how
you are going to pay tommorrow's bill, all a sudden their is an
urgency to succeed that not only is urgent but essential. Its
amazing what a person can accomplish when they are backed against
the wall and have no choice but to do it. Its amazing how much
someone can save when they ahve a tight budget to conform to, and
they know when the money is gone the money is gone. Wether it makes
sense to lease is not the golden question. The golden question is,
how will you spend the money that becomes available because you
leased. That is what will seperate the winners from the loosers.
One of the most basic concepts there is in accounting is, its much
more beneficial to reduce your costs $100, than to make $100 more
income, because the $100 income have additional costs that grow with
it. I think leasing makes sense if you get good terms, and are
short on cash flow, but if you are not frugal in spending along the
way, one is just deffering their death by leasing.
Whats important is that the money spent, has something tangible and
of value (holds its value on a reoccuring basis). Things like high
salaries that are spent and gone, or technology greater than one's
need in a business with falling prices and rapid advancement, are
monies spent that have little value after the fact.
Disclaimer, this comment does not negate the importance to determine
the amount of capitol (cash) that will be needed and securing it
before progressing with a business plan.
Tom DeReggi
RapidDSL & Wireless, Inc
IntAirNet- Fixed Wireless Broadband
----- Original Message ----- From: "Rick Smith" <[EMAIL PROTECTED]>
To: "'WISPA General List'" <wireless@wispa.org>
Sent: Tuesday, October 17, 2006 3:48 PM
Subject: RE: [WISPA] Are you making money?
exactly the mistake my company made. Shoulda, woulda, coulda
leased...
'cept in NJ, it's $125 contract labor, and $244 for installation (199
install / 45 first month), oh and no free towers, they're all (16
of them)
$500 / month / each at LEAST....
No free lunch. So to answer the previous question #3, no you will
not be
making tons of money - you will be eating your shirt :)
-----Original Message-----
From: [EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED] On
Behalf Of Travis Johnson
Sent: Tuesday, October 17, 2006 3:24 PM
To: WISPA General List
Subject: Re: [WISPA] Are you making money?
Hi,
Although he has spent some time and efforts, many of his numbers
are WAY
off:
$50 installs (contract labor)
customers paying $360 for installation
$40 per month ARPU (for a startup WISP is not realistic today with
$15 DSL)
Just taking the installation numbers away completely changes this
sheet...
we are doing $99 installs and include a free Linksys wireless
firewall/router. So now instead of making $15 per install, he will
be losing
$246. So now after 2 years, the company is making $11,736 per month
profit
but still shows $42,000 in debt (from the first 2 years) and hasn't
paid
anything back to the investors, banks, etc.
Now, if you use the same sheet, lease the CPE ($5/mo per customer)
and still
buy the Linksys router for $40, the company is making $18,800 per
month
profit and has $98,000 in cash after 2 years. ;)
Travis
Microserv
Brian Rohrbacher wrote:
http://www.dslreports.com/forum/remark,17086669
I have not got to the spreadsheet, but the post was well worth the 5
minute read, and I'm looking forward to getting some numbers down on
the spreadsheet. I think this could help some of us.
Brian
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