RadiusCom targets rural Internet growth

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by Trenton Tubbs|ret||ret||tab|

SBJ Contributing Writer|ret||ret||tab|

sbj@sbj.net|ret||ret||tab|

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High-speed Internet has taken a slow path to rural areas. While it is gaining popularity in cities these days, rural residents will have a similar service option via Republic-based RadiusCom Corp., which incorporated in June.|ret||ret||tab|

Working with rural cities in a five-state region, RadiusCom is offering wireless broadband.|ret||ret||tab|

Keith Miller, president of RadiusCom and former mayor of Republic, knows just how important the Internet is for rural communities. |ret||ret||tab|

"I grew up in a rural community in Kansas and what you see, and I'm an example of that, is if you don't have certain services or certain draws in a community, you move away from it," he said. "After high school, you move away from it and don't come back."|ret||ret||tab|

Offering broadband, or high-speed, Internet service would be one incentive for rural residents to stay. It would also help attract new businesses, with so many companies depending on the Internet, Miller said. |ret||ret||tab|

"When (businesses) go to locate, that's one of the things they ask for. If it's not available, they go to the next community on their list," Miller said.|ret||ret||tab|

Wireless transmission is the best way to provide rural communities with this service, Miller said. Existing alternatives, such as digital subscriber line, or DSL, and cable modem, serve larger communities well but are too expensive to implement in rural areas, he said. "Even if some of those systems are there, they don't service everyone in a community," he said.|ret||ret||tab|

Ann Balsamo, spokesperson for SBC Communications Inc., said expanding DSL service is a priority.|ret||ret||tab|

"We're aggressively deploying in rural areas now." DSL expansion last year included 1,700 rural and urban communities, she said.|ret||ret||tab|

"We've launched a program to kind of explain the benefits of DSL in rural areas called the Route DSL Hometown Tour. It actually recently went to Nixa," she said, referring to a visit in early May. The tour allows residents to experience DSL service firsthand. It will visit another Ozarks town whose name has not been released.|ret||ret||tab|

DSL service is delivered over phone lines and a subscriber must be within 18,000 feet of a DSL access multiplexer to receive service, she said. |ret||ret||tab|

Although satellite high-speed Internet service is available in rural areas, it costs around $60 per month and includes an additional $900 in equipment costs, Miller said. RadiusCom will offer broadband for roughly $30 per month.|ret||ret||tab|

Two years ago, while Miller was mayor of Republic, the town tested Motorola's Canopy wireless broadband system, he said. |ret||ret||tab|

After not being re-elected to office in April, Miller contemplated his next move. Thinking about his experience in Republic, he saw an opportunity to provide wireless Internet to rural residents by working with small towns directly. |ret||ret||tab|

"In a city, say Republic for instance, when people have high-speed Internet, they're more likely to go online and shop. When they do, you lose sales tax," he said. "For local municipalities, that's one of your main sources of revenue: sales tax and user fees Why not let (cities) be the high-speed Internet provider and charge a fee while people shop to make up for lost revenue?"|ret||ret||tab|

The company will work in partnership with 12 yet-to-be-determined towns initially, installing the wireless systems through a turnkey program that includes around-theclock tech support and a five-year warranty on equipment. The cities will purchase the equipment through a lease-purchase agreement and will collect the user fees.|ret||ret||tab|

Miller is working with Dennis DePriest, executive consultant to RadiusCom, to target towns in Missouri and the contiguous five-state region of Arkansas, Oklahoma, Kansas, Nebraska and Iowa, he said. In this region, 1,200 communities fall within the population range of 5,000 to 12,000 that RadiusCom will focus on. "We believe that there are enough people in those communities that will go to the broadband connections and make these systems pay for themselves," Miller said.|ret||ret||tab|

DePriest has owned and managed several businesses during his career, most recently as CEO of Rogersville-based Third Millenium Industries before it folded in May. For the past four years, he has worked as a consultant to Missouri small businesses, handling all aspects of developing and managing the businesses. As a consultant to RadiusCom, DePriest has developed the business model and he is helping to secure start-up funding, to market services and to assist with the process of going public.|ret||ret||tab|

The base setup in the cities will require three or four days of work and will be contracted locally.|ret||ret||tab|

The subscriber will then receive a wireless modem that attaches to the computer with a USB connector. "You plug in one end to the power source, and the other to your computer. It's just that easy," DePriest said.|ret||ret||tab|

As for performance, users will be able to download a five-megapixel picture in 30 seconds, compared to 45 seconds for a cable modem connection, DePriest said.|ret||ret||tab|

One advantage of the technology is that it is non-line-of-sight, which means the signal can pass through buildings and trees. And if subscribers are still out of the approximately 10-mile radius of service, they can buy a high-gain antenna to cover an additional three to five miles. The modem can also be used with a battery and a laptop computer, allowing portability within the service area, DePriest said.|ret||ret||tab|

The wireless system still relies on fiber-optic cable for its connection to Internet service at the transmission point. If a town does not have a fiber-optic supply, a wireless signal can be "bounced" up to 35 miles from a town with existing service, Miller said.|ret||ret||tab|

The technology is just one factor that Miller and DePriest have figured out. The real challenge is how to market and fund the systems, DePriest said. "Our business model is based on an approximate price of $30 a month, and given everything we've seen in national pricing, that looks to be a very attractive price for broadband supply," he said. They want to get 375 subscribers per 10,000 people.|ret||ret||tab|

RadiusCom, located at 245 U.S. Hwy. 60, hopes to sign up 8,775 subscribers in its first year, when its sales projections are $4,526,000. While the company incorporated in June, it is moving quickly into the first phase of development. |ret||ret||tab|

"We're in the process right now of raising the initial investor monies to get the thing going. We are going to sell about a dozen systems to communities," DePriest said, referring to the municipal systems to be installed by February 2005. "The gross margin generated from the sales of those communities funds the next phase of our development, which is taking this company public."|ret||ret||tab|

DePriest expects the second phase of the plan to go very smoothly, with the company planning to go public in the microcap market in early 2005. |ret||ret||tab|

Tim Reese, senior vice president, investments, with A.G. Edwards, said, "Although you see a lot of numbers out there, (a microcap) is generally a company with a market capitalization of less than $100 million." |ret||ret||tab|

Miller said the company will file paperwork to go public in November, and the process of going public should take approximately 30 days. Stock should start trading around the first of the year.|ret||ret||tab|

After installing the municipal systems, the company plans on setting up 80 to 100 private systems in its target region by 2006. Then DePriest hopes the bigger players in the technology-communication field will come in and start gobbling up companies like ours and unifying them," DePriest said. |ret||ret||tab|

The equipment is upgradeable to the WiMax system, which will be a step up from current capabilities, DePriest said. WiMax, according to a news release from Intel, is a standards-based wireless technology that provides high throughput broadband connections over long distances. |ret||ret||tab|

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