----- Original Message ----- From: "Charles Wu (CTI)" <[EMAIL PROTECTED]> To: "WISPA General List" <wireless@wispa.org> Sent: Friday, December 05, 2008 6:18 AM Subject: [WISPA] WISP Business Model -- remember this?
All this talk about business models got me to dig through my notes where I found a WISP business model that I (and a bunch of people on one of the list-servs) collaboratively put together back in late 2003 / early 2004...looking at it from a time capsule perspective, I thought it would be interesting to pull it out and share it with everyone to see if these stated "projections" actually held salt See attached In looking at this, I have a few criticism regarding this 1. Assuming that salaries are being paid (no "entrepreneur mojo" or "sweat equity") -- My original model showed "OPEX positive" @ 800 customers ($35k / month) & a "Profitable ROI tipping-point" @ approximately 1400 customers ($60k / month) -- thoughts? Too high? Too low? mks: We have a gross profit of about $45 to $50k per year these days. On roughly 500 paying subs. (we might be over 550 but it's hard to me to guage sometimes cause we have so many barter accounts) 2. Personally, I think I under-estimated salary expenses -- for example, I have the main "business / sales" & "networking tech" guy making $40k / year each -- with the "wisdom" that I've accrued, I think those salaries would be more in the range of $60-80k / year -- that would modify the above numbers to OPEX positive @ 1,000 customers & a "Profitable ROI tipping-point" @ approximately 1700 customers mks: At under 700 or 800 subs it's still an entrepenure type business. I'm not sure what to pay a "networking tech guy". They should be a dime a dozen as anyone with a couple of years of computer experience and mosest mechanical skills can do 90% of what I do every day. The other 10% is available via phone call or occasional paid consultant. But if you're in LA vs. rural eastern Wa. I'm sure that'll make a difference too. 3. I don't have a provision for overbuild / massive network upgrades -- curious -- how many people have been able to stick with the infrastructure platform they initially selected 5 years ago? Or is it just a constant struggle to replace / upgrade / throw out old equipment -- how much would be a reasonable budget? 10% of total CAPEX? 20% of total CAPEX? mks: We pretty well have just kept adding pops (though no more big ones lately) and upgrading ap's and backhaul systems. Fortunately that's getting downright cheap to do these days. Even with high quality gear. And I've started putting antennas up high and running big coax down to the ground so device swaps are pretty quick and easy too. mks: I'd guess that I'm spending a bit over my $600 per month upgrade budget. Some months it's a bit more, some a bit less. I'm spending more than I really have to cause our reputation is for very high grade services and I'm tired of tech support phone calls so I'm working to improve reliability above and beyond what's probably needed for dsl grade services. 4. In hindsight, knowing what you know now and seeing this model (IMO, I think we're actually pretty close), would you have gotten into this business? Any comments? mks: Most of what I've seen would hold pretty well yet. The business model still holds. In fact the profit per sub has come up higher than I thought it would faster than I thought. Not far enough or fast enough, but it's getting there. mks: Starting all over I'd probably have tried to find a way to do more outsourcing of email, web hosting etc. Although, with another 400 or so subs I will be able to afford to hire a tech that can work on the servers and such. I have trouble letting go of the things that are so important to my customers and my business. mks: I work hard and long hours. But if we'd not have been so far in debt when I started that wouldn't have to be the case. I could already have more help. But we're getting good tools (2 spectrum analyzers, bucket truck, newer install rig, motorbikes for when the tower's are in accessable etc.), better hardware and still run a pretty low churn rate. This year we'll pay off $600 or $800 in montly loans and won't have to borrow money for the gear we borrowed on years ago. Our credit cards are dropping etc. 3 years down the road is looking pretty good. mks: Upstream connectivity and distribution to enough people per ap (really a spectrum issue more than anything else) are the two biggest challenges that I see coming up. Not that we can't get enough, we can't get enough out cheap enough. I still pay $150 to $250 per month per meg. People don't understand that and it's been hard to educate them. laters, marlon -Charles This message is intended only for the use of the individual or entity to which it is addressed and may contain information that is privileged, confidential and exempt from disclosure under applicable law. If the reader of this message is not the intended recipient, or the employee or agent responsible for delivery of the message to the intended recipient, you are hereby notified that any dissemination, distribution or copying of this communication is strictly prohibited. If you have received this communication in error, please notify us immediately by telephone at 630-344-1586. -------------------------------------------------------------------------------- > > > -------------------------------------------------------------------------------- > WISPA Wants You! 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