Say Goodbye to Copper

I saw the future today - and it is invisible. I was in Baltimore at the Spring ISPCON (Internet Service Providers Conference).

Most people know of ISP's like AOL and MindSpring. But a new breed of ISP is popping up all around the country. They are called WISP's or Wireless ISP's. These WISP's are speading a disruptive technology that allows the delivery of high speed internet to homes and businesses via un-licensed radio spectrum.

What this means is that any buckaroo entrepreneur with $20,000 - $30,000 can open up shop and deliver high-speed internet at prices and speeds competitive with Verizon DSL or Comcast Cable.

What's the scary part for the big Telco's and Cable companies?

The WISP has no investment in copper!

No cables in the ground!

No wires to run to the house!

No sunk costs to amortize!

Most important? The system is infinitely scalable. Whereas the large Telcos and Cable Companies must spend millions of dollars to build out a network of copper cables before they can sell their first customer, the WISP can spend a few thousand dollars and be in business inside of a month. The WISP can serve a small community of 40 users in Brooklyn, 400 users in Matewan, WV or 40,000 users in Augusta, GA. Or perhaps, the WISP will start at 40 users and grow in a few years to 40,000 users.

If I were a large ISP, the only thing that would make me feel good is that I'm not a incumbent wire line telephone company. Because the other thing that was quite obvious at this show is that VOIP (Voice Over Internet Protocol) is a tsunami that is about to crest and wash away the old way of making and receiving telephone calls.

Five years ago I bought a VOIP system for a company I was running. We bought $500,000 of equipment and committed to spend an additional $3,000 per month in telco charges. Even at this cost, the company was saving money.

I priced the equivalent system today and it was $3,500 per month -- with NO EQUIPMENT CHARGES. It had all of the same features and benefits, but without all the equipment charges and the complicated management costs.

There is no way that the current model of business and residential telephony will survive the convergence of cheap wireless internet and cheap VOIP service.

I spoke to many of the equipment manufacturers at the show and they told me that much of the wireless internet and VOIP equipment being sold today is going to developing countries in Latin America and Asia. Many of these countries are completely bypassing copper and going straight to wireless services.

If I was a commodity trader, the first thing I would do is short oil (see "Grandpa Tell Me 'Bout the Good Ole Days); but then I would short copper.

Also posted at Blogger News Network