Jeffrey M. Thompson co-founded Towerstream in December 1999 with Philip Urso, serving as a director until November 2005 when he became president and CEO. Before Towerstream, Thompson co-founded and served as vice president of operations of EdgeNet Inc., a privately-held Internet service provider, which was sold to Citadel Broadcasting Corporation in 1997 and became eFortress in 1999.
In January, Towerstream announced plans to expand on a pilot Wi-Fi network in Manhattan that supplements mobile data offloading in areas with a high level of mobile broadband usage; Towerstream’s next move is to become a wholesale broadband provider for U.S. cities.
PBN: In January, Towerstream announced plans to expand on a pilot Wi-Fi network in Manhattan that supplements mobile data offloading in areas with a high level of mobile broadband usage; Towerstream’s next move is to become a wholesale broadband provider for in U.S. cities. Tell us about the Manhattan pilot program and what kind of results it got.
THOMPSON: Over the last several years data-hungry devices like smart phones and tablets have strained wireless networks to the brink, and it has become clear that current 3G and 4G networks alone are not sufficient to handle this massive increase in traffic. Using Wi-Fi to offload some of this traffic in congested areas with high levels of mobile broadband usage is a very effective way to relieve some of the strain on next-generation broadband networks. As device support for Wi-Fi has hit critical mass, it’s become clear that the major wireless carriers view Wi-Fi as an important part of their business moving forward.
The trial period of our Manhattan pilot Wi-Fi network was very successful and reinforced the huge demand for robust Wi-Fi coverage in highly congested areas. In the first few months after launching our pilot in Manhattan, our Wi-Fi network experienced millions of connections – primarily from handsets – and supported an average of 250,000 connections and over one terabyte of data transfer per day. The sheer volume of connections surprised us and made the value of carrier-class Wi-Fi networks abundantly clear.
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PBN: Towerstream is planning additional hotzones in New York City, San Francisco and Chicago for 2011. It sounds like this initiative could be a major gamechanger for Towerstream.
THOMPSON: The primary goal of our Wi-Fi hotzone initiative is to quickly build robust Wi-Fi coverage in major markets across the country with the highest volume of network congestion. We are very focused on expanding our New York City Wi-Fi network as rapidly as possible and are working to construct 1000 access points in Manhattan by later this year. With the potential to support speeds of up to 200 megabytes per second, we believe we’re building one of the fastest portable Wi-Fi networks in Manhattan. Upon completion of our Manhattan network, we will build similar networks of hotzones in San Francisco, Chicago and any other major markets with significant congestion issues.
Our core business providing 4G Internet service to businesses remains strong and we will continue to pursue expansion to new markets and potential acquisitions when it makes sense.
PBN: I understand Towerstream has stumbled upon another business possibility involving advertising companies that are interested in knowing where users are, through their WiFi connection, without taking personal information. Is this a real possibility for Towerstream?
THOMPSON: We are currently investigating potential use cases for an advertising model on our Wi-Fi network, but it is abundantly clear that local advertising is a compelling business model that will not go away. As we have seen with the success of Groupon and other local deal services, small businesses are very enthusiastic to tap into the power of local search. Since every search conducted on a Wi-Fi network is inherently local, advertisers are eager to incorporate this data to deliver highly targeted ads. We can deliver this data to local advertisers in a way that protects users’ privacy and ultimately produces exciting, nonintrusive advertisements. This advertising model can be done at the same time as a wholesale model to wireless carriers, for which the network was designed.
PBN: Also a milestone: Dallas recently became the ninth of Towerstream’s 11 markets to reach EBITDA profitability. How does this market factor into the company’s overall strategy, what implications does this benchmark have and what are the remaining 2 markets?
THOMPSON: We launched our service in the Dallas/Fort Worth market in April 2008, right at the beginning of the economic downturn and are very pleased to reach EBITDA profitability in such a short time frame. This milestone reinforces the fact that businesses across the country recognize the advantages of our wireless solution, including faster delivery and scalable service at a lower cost. Dallas is the fifth largest market in the country and is clearly very important to our overall strategy.
The two markets in which we haven’t yet reached EBITDA profitability are Philadelphia and Nashville. We are still focusing on building out our network in Philadelphia and that will take some time. Our Nashville network was deployed as the direct result of our acquisition of Sparkplug Communications last year, and we are methodically investing in that market as well.
PBN: Any thoughts on the FCC’s net-neutrality order?
THOMPSON: Towerstream supports an open Internet that provides consumers with access to information when, where and how they want it. Therefore, we believe net neutrality means preserving the openness of the Internet while maintaining the right incentives for deployment of the next-generation networks needed to support all the applications, content and services that consumers want.
