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Optical/IP

Takin' It to the Sticks

Small towns are rarely ahead of the technology curve or known for early adoption. Ask any would-be DSL user outside the nation's 50 largest markets. Wholesale provider NuTel Broadband is looking to change that.

The service provider says it will partner with mesh-network equipment vendor SkyPilot Networks Inc. to offer broadband data-and-voice services via local partners in small towns and suburban communities across a 14-state area.

The NuTel/SkyPilot approach is the opposite of major all-in-one municipal buildouts announced by EarthLink Inc. (Nasdaq: ELNK) and Google (Nasdaq: GOOG) for big cities like San Francisco and Philadelphia.

NuTel CEO Joe Fiero, in fact, dismisses that model, saying the upfront deployment costs of covering a large city "will cripple you."

NuTel, says Fiero, will expand its network cloud one customer at a time.

"As some people have seen, it's a lot easier to say you're going to cover a city or a county than it is to actually do it," comments Fiero. "We'll get there in an organic way -- as we grow our customer base we'll automatically grow the size of our cloud."

Concentrating on what Fiero calls tier-2 and below towns -- loosely defined as the suburbs of larger cities and individual towns with a population of 100,000 or less -- NuTel will work through partners in each locale. The partners might be wireless ISPs or any company used to handling installations and local marketing.

In effect, says Lina Kalcic, vice president of corporate marketing for SkyPilot, the local partners will be the front-end service providers. "They'll be local and regional ISPs," she says. "We figure they've got the customer relations, they know the territory, and they'll handle the marketing and billing as far as the end user."

Fiero says NuTel has established relationships with eight to 10 local partners and expects to have around 200 by the end of 2007. The initial coverage area will include the Mississippi Valley from Wisconsin down to eastern Arkansas as well as parts of Northern California, western Pennsylvania in the Pittsburgh suburbs, southern Kentucky and other areas not currently served by DSL or other forms of broadband access.

Service offerings will start at $14.99 a month for a 200-Kbit/s dial-up replacement up to a 1.5-Mbit/s high-speed voice and data service for $59.99 a month. The service, says Kalcic, will be especially attractive to IT managers at small and medium-sized businesses who so far have had little choice beyond their incumbent telco.

"Smaller businesses that haven't had much diversity of providers are looking at how to more efficiently run their business with this kind of service," says Kalcic. "A lot of [small to medium-sized enterprises] see this as a really attractive service offering."

SkyPilot, which has moved from being a service provider with its own networking gear to being an equipment vendor, sees the underserved Tier 2 markets as attractive locales for its dual-band mesh equipment, as well as its SkyConnector units for customer premises. NuTel -- which will build and manage the networks -- will use fiber and microwave radio systems for backhaul. (See SkyPilot Finds Muni Landing Strip.)

Fiero says he expects to see some of the new networks up and running in the next 90 days.

— Richard Martin, Senior Editor, Unstrung

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