Telcotrash

Google Wi-Fi Economics

The location of Google's Mountain View access points can now be seen here (via Niall and GigaOM). Since counting access points on maps is one of life's simple pleasures (right after software and porn): there seem to be 364 of them (any other bean counter out there besides me?), though apparently Google (GOOG) officially reported 350 nodes (see Dennis Cheung). Tropos Networks is the royal supplier for the access points, for backhauling GoogleFi is using Alvarion (ALVR) equipment - not surprising, since Alvarion and Tropos have teamed up together to conquer the municipal Wi-Fi market. There are three Alvarion BreezeACCESS™ cells and one in seven mesh nodes acts as a gateway and connects back to those cells.
So let's do a little back-of-the-envelope Google Wi-Fi Economics. In Wi-Fi for the Masses (via Glenn), the retail price of a Tropos mesh router (that's the official marketing term Tropos uses for its Wi-Fi routers) is reported to be US$ 3,500. One might wonder why Tropos access points (some background) are so much more expensive than other carrier-grade equipment, e.g. a Cisco Outdoor Aironet access point costs around US$900-1000 on the web. Tropos charges dearly for their mesh algorithm, their secret sauce, so Tropos is actually somewhat more of a software company with a hardware shop in the basement, similar to Cisco.

But subtract a ~40% wholesale discount from the retail price and we're in the US$ 2,000 region which I think is realistic if you go out there and buy 364 access points. The Alvarion equipment will probably be in the US$10,000 range per unit, incl. all add-on hardware like antennae. Tropos says that installing a node only takes some 15 minutes, but I think it's more than that, considering that also the wiring for a node has to be taken care of. So for truck rolls and power wiring US$500 per node seems reasonable. Add another $60,000 for IT infrastructure and network control, and the total cost for installing the mesh network is US$ 1 Mio.

                                               

Component	Units	Unit price	Total
Tropos access points	364	$ 2,000	$ 728,000
Alvarion Breezemax stations	3	$ 10,000	$ 30,000
Truck rolls and installation	367	$ 500	$ 183,500
IT infrastructure	1	$ 60,000	$ 60,000
Total			$1,001,500

According to the latest US Census data (via Wikipedia), there are some 70,000 people in 31,000 households (2.3 pop/household) living in Mountain View, spread across a surface of about 12 sqm. So Google is spending US$83,500 per square-mile and US$33 per household passed (for your reference, DSL and cable are usually in the US$80-90 range...), and if we assume that each person in each household is connected and can enjoy the maximally possible 1 Mbit/s, then the Capex per usable Mbit of bandwidth is US$14.31, whereas Cable and DSL would be in the US$40 range. Of couse these figures can vary depending on offering and oversubcription factors, and there would have to be some additional capex items to be considered for the Google network too really be precise and comparable, but the point is that for these KPIs cable and DSL seem to be roughly at least twice as expensive (if my calculations are correct, that is), so wireless mesh has a clear cost advantage.

Google's plan is to recover the costs through advertising, hence ad clicks by users (let's ignore the paid premium service for the moment). Assuming that 30% of Mountain View's households will use Google's service (21,000 users) and that the initial investment has to be recovered over two years (US$42,000 per month), then on a per-user-basis this turns out to be a very low US$2.0 per user and month (that ignores opex, and the estimates might be completely far from reality). I'll cover in a follow-up post if that is financable through advertising and if there will also be enough room to cover the opex of the network.

Stealth Start-ups, Part I of III

Well, and then again maybe not so stealth as some of them have been around for quite a while by now (some of them since 2005). At the recent Under The Radar Conference in June, some 32 companies presented. Here's a short profile of the first 11 and some links with more information.

Amiglia: Amiglia offers photo and social software technology; it is focused on family networks, tying a visual and interactive family tree with an online photo album. Amiglia uses technology from Riya, a photo search engine that uses face and text recognition to look inside a photograph in order for a user to find a specific picture. Amiglia also offers Skype integration. More from Silicon Beat and the Amiglia Blog.  

Blip.tv: blip.tv is a video videoblogging, podcasting and video sharing service. Another YouTube? Not really, say the founders of blip.tv. The core function of blip.tv's service is that it allows its users to take video they upload to Blip's servers and easily push it out to external sites. Blip.tv doesn't brand the videos with its logo either. A similar service btw is offered by Revver. More from CNET and the blip.tv blog. 

CastPost: CastPost is a consumer video hosting service to share personal video and audio clips. At the Under the Radar Conference, the CastPost folks got slammed by Google's Chris Sacca: More from the VC Ratings Blog.

Flukiest: Flukiest is a video/photo/music sharing site, however they especially seem to focus on creating a platform for bands to promote their music and create and sell merchandise. One nice feature seems to be their email function: I haven't tried it, but apparently you can simply email your picture to your flukiest email address and it's automatically uploaded and published. More from Forbes and the Under The Radar Blog.
Note: I'm sure that the folks at Flukiest are happy to hear that Eye-Fi, another start-up, is previewing a combination secure digital (SD) 802.11g radio and 1GB of storage into a singleSD card. While 802.11 cards with memory capability are not new (SanDisk debuted one in 2003), to date the cards have been able to work in slots enabled for SDIO (SD Input/Output). In the Eye-Fi implementation (the company is stating is stating it will offer more details later this year), the standard sized SD card would effectively Wifi enable a previously non enabled device. Again more from TechCrunch.

VideoEgg: VideoEgg is a web-based publishing service that allows users to capture video content from virtually any device and format and publish it to the web. More from TechCrunch.

Eyespot: Eyespot is a video share site that allows its users to upload their video, mix it together with audio, and then share them with anyone online. That's why Eyespot is called "Home of the mixer." Eyespot is also a social service allowing users to tag, join groups, and create blogs for their videos. More from Mashable! and Solutionwatch.

BroadbandSports: BroadbandSports is a video share site with 18 different channels on sport. The site features a community where enthusiasts are able to share, view and discuss sports and to rank and rate videos. Users can receive instant notification of new programming based on keyword “tags” like “skiing” or even by favorite athlete or destination. More from the Under The Radar Blog.

With so many video sharing sites around, TechCrunch prepared an excellent summary. And while we're at summaries, though completely unrelated, rev2.org has an excellent one on social networking sites: 33 places to hang out - the comments are very interesting as well. 

Filmloop: I posted about Filmloop back in 2005.

Dabble: Dabble leverages the best of Web 2.0 technology to allow users to create, manage and share spreadsheets, databases and intranet web applications. Here is the video that Dabble presented at the Under the Radar Conference. A lot more on Dabble from Solutionwatch.

Fabrik: Fabrik is principally an online storage company, but it doesn't end there. Fabrik offers a browser-like interface that allows to store, manage and share your data from your PC in an apparently very convenient manner. More from GigaOm.

Pixsy: Pixsy is a visual search engine that provides access to imagery posted on the web. Results pages include thumbnails along with direct links to the image url and the page where the image is posted. Worked pretty well for me. More from SearchEngineWatch.

Next post will cover Grouper, Jamendo, Jumpcut, Kiptronic, Mefeedia, MicroNet, MusicStrarnds, Pando, Phanfare, PiXPO and Podbridge. The third and last post will comprise Podserve, PodOmatic, Project Opus, PXN8, Songbirdnest, Reality Digial, Revver, TagWorld, TurnHere, Zoto. 

Clearwire calls IPO off and gets US$900 Mio. from Motorola and Intel Capital

Apparently Clearwire has called its IPO off - a move which I completely understand, given that Motorola and Intel Capital are pitching in US$300 Mio. and US$600 Mio. respectively to fund Clearwire's future expansion (Motorola ress release, Intel Capital press release). Intel Capital had previously invested in Clearwire.

With the US$300 Mio., Motorola is buying out NextNet Wireless, Clearwire's wireless equipment subsidiary. Intel Capital is taking a direct equity stake, which seems to be a change in Intel Capital's strategy, as previous investment were considerably smaller.

Intel seems to have got tired of waiting for large scale WiMAX deployments by incument CellCos, and decided to give it a shot on its own (read: through Clearwire). Another fear probably was that any WiMAX service by the CellCos would have been priced too high to quickly become a mass market play, as the CellCos certainly have no interest to cannibalize their 3G investments. And looking at Intel's stock price, which has dropped from the US$28 to the US$18 range in the last 12 months, Intel management might have decided that helping a green-field provider with no legacy infrastructure such as Clearwire to roll-out its network is the best way to revive the wireless broadband market and sell more wireless broadband chips.

What could Clearwire do with this money, apart from acquiring spectrum in the upcoming AWS auctions? At a maximum cost of US$100,000 per base station, Clearwire could build at least 9,000 additional base stations.

That's a lot of base stations for new markets - though certainly not enough to cover the entire US. A simple calculation: the FCC's cellular market areas (map, census data) cover a land area of about 3,482,688 sqm, of which the surface is equal to a square with a side length of roughly 1800 miles if the squareroot function in my Excel works correctly. A seamless coverage of such a square with WiMAX base stations with a cell radius of 3 miles (positive thinking...) would require 90,000 base stations (note: I used the formula r=(1/(2n))*√2*L which gives you the radius r for n^2 cells to cover a square-shaped area with a side length of L. See Smura p.83), which is not financable with Clearwire's funds.

The point I'm trying to make here with these very simple numbers is that the truth of Clearwire's ultimate roll-out goal must be somewhere between covering white spots in the US broadband market (Clearwire's initial goal some three years ago when the company was founded) and the entire US population. In this basic math example, with a minimum of 9,000 additional stations Clearwire would cover at least 10% of the US' surface, and carefully selected depending on household density and broadband penetration, a lot higher percentage of the US population (my guess is ~ 25% over the next three years) with room for broadband growth.  And that still would leave it with the US$125 Mio. of cash it had on it balance sheet as of December 2005, which should be enough to fund operations for some three years (US$40 Mio. per year, >US$3 Mio. per month).

Recent Fundings and IPO Filings

Here is a (by no means exhaustive) summary of web/tech fundings and IPO filings that I've come across during the past days.

Email marketing firm Constant Contact has received US$15 Mio. in funding (press release). First time investor Greylock Partners is leading this round with US$10 Mio. CC's existing investors Commonwealth Capital Ventures, Hudson Ventures, Longworth Venture Partners, and Morgan Stanley Venture Partners chip in an additional US$5 million. Lead investor Greylock Partners' better known portfolio companies comprise Red Hat and DoubleClick.

Mobile marketing software developer Mozes Inc. has received US$ 0.75 Mio. in funding from angel investors. SiliconBeat reports more on how Mozes works.

Zopa, a UK-based online marketplace for P2P borrowing and lending, received US$5 Mio. in addition to the US$15 Mio. it recently secured from Bessemer Venture Partners as well as existing investors Benchmark Capital and German VC boutique Wellington Partners.
Bessemer also funded Skype, which might explain why Tim Draper - also a Skype investor - decided to pull out this round's US$5 Mio. out of his pockets, together with the Rowland Family (and I don't have the slightest clue who their are, but apparently some wealthy (UK?) family with a track record of allocating their money to Internet companies, e.g. Autonomy). Wellington Partners is well known in Germany due to their investment in Alando, a German eBay copy-cat, which eBay itself acquired only three months after Alando's go-live. Alando's founders, ze Samwer brothers, to build a ringtone business with Jamba, acquired by Verisign in 2004.

iBloks sealed US$3 Mio. from Seattle-based Maveron LLC. iBlok has created a software which enables consumers to combine photos, video, music and three-dimensional animation into personalized applications. So one more company that rides the user-created content wave.

That leads to Shutterfly, probably the first online photo-sharing company that attempts an IPO. Shutterfly was formed in 1999 and according to VentureWire has been profitable for three years through printing and shipping photo prints and selling photo-based mugs, mouse pads and frames. Its net income in 2005 surged to $28.9 million from $3.7 million the year before, as revenue increased to $83.9 million from $54.5 million, but find out yourself by checking Shutterfly's S-1 filing. VC backers of Shutterfly are Silicon Valley Bank, Adobe Ventures, Mohr, Davidow Ventures, and Netscape founder Jim Clark and ex-KPCB partner Tom Jermoluk.

Next IPO candidate is Optium Corporation, which produces optical transmission equipment. Optium has filed its S-1 (link), but interestingly enough there is no news release on their website. I guess  the folks at Optium are really busy doing other stuff then. Their revenues in FY 05, which ended on July 30, were US$37 Mio. and a net loss of US$1.5 Mio. Revenues for the first three quarters of FY 06 were US$48 Mio. and a net loss of US$9.3 Mio. The large raise in net loss is due to the acquistion of Engana,  a producer of wavelength selective switch modules, which Optium decided to expense with US$11.2 Mio.

And finally, GigaOm has more on the rumors of another optical IPO, that of Infinera.