186networks: A small, stubborn (wireless) challenge to the big cable service Providers

Joseph Gaylord has managed to assemble his own small-ish challenge to the big cable companies.

It all started with his frustration over dialup. Remember dialup? (If not, then think annoying screeching sounds over your phone line, frequent downtime, and Model-T speeds.)

And dialup could be expensive.

In fact, back in 1996, a $250 bill for one month’s dialup service was enough to convince the Rapid City native that his hometown needed a cheaper alternative. He was 20, working as a carryout guy at a local grocery store, and attending Northwestern Michigan College.

He got a loan, borrowed money from his parents, quit school, and went for it. He was in the dialup business.

What’s in a Name?

At first, Gaylord called his company Chain O’Lakes Internet. Then he shortened it to the abbreviation COLI, which turned out to be ill-advised. “People starting thinking about E. coli bacteria,” he said. Not a great brand image.

Today, the company does business as 186networks. The number refers to the speed of light, which makes sense, given that wireless transmissions operate that fast.

A Chilly Start

The early days were lean indeed. Gaylord describes his first office as “smaller than the average bathroom.” Modems filled the room.

“The first thing I did was to get phone lines into the building,” Gaylord said. “For power, I ran an extension cord to my neighbor’s house.”

It was November, and a single space heater was all he had to try to stay warm. Luckily, the modems put off some heat.

Cable Comes, Dialup Dies

Eventually, the big competitors came to town and installed cable wherever it was economically feasible.

That presented a challenge to Gaylord. Clearly, dialups were on the way out.

It was time for Coli to get a new (and less biological) name and find a new market niche that would allow the company to survive.

He decided to transition to wireless technology, meaning Internet service is sent by tower-mounted radio transmitters into homes and businesses. 186networks installs a small (a roughly 1.5-foot-diameter) dish outside a customer’s home or office, enabling him or her to receive and send data. The only cable involved is one that spans the short distance from the dish to the customer’s computer or modem.

Business Case

The business model 186networks uses to differentiate itself from larger service providers is simple:

  • Service (promising quick response if a problem arises)
  • Speed (offering 75, 15, or 8 megabytes per second)
  • Savings (keeping most prices in the $50- to $60-per-month range)

Limitations of Wireless

Gaylord acknowledges that wireless providers face one major limitation — the “line of sight” issue.

Reception depends upon an unobstructed pathway from the radio tower to the customer. Our northern Michigan hills can present a problem, and reception in heavily wooded areas usually doesn’t work.

He estimates that only 20 percent of all Internet users in the Grand Traverse area could access wireless services.

Even with those considerable limitations, 186networks’ changeover to wireless technology has expanded the company’s geographic reach and staff size.

Technicians and installers have been hired, and most of Gaylord’s family has become involved. His younger brother, Bill, serves as company president; Joseph is vice-president; his father, Michael, is treasurer; and Dale, his mom, is the secretary.

The Company’s Future

Gaylord stops short of divulging the exact number of homes and business the company serves. He’ll only say that 186networks “has thousands of customers,” most of whom live in the Rapid City, Torch Lake, Kalkaska, and Mancelona area. Some customers live as far south as Thompsonvillle.

His growth plan, he said, is to “continue to expand the overall service area and to fill in the gaps in the areas we’re already in.”

186networks already has some customers in Northport and in a few other spots on the Leelanau Peninsula and has recently begun making some inroads into the Traverse City market. “Some businesses use us as a backup, and for some, we’re their main provider,” Gaylord said. “We haven’t really focused a lot on Traverse City in the past, but we are now.”

He is also considering getting into fiber optics as a delivery system. That would require a big investment but could greatly expand bandwidth. At this point, 186networks is experimenting with the technology on a very small scale.

Whatever happens, Gaylord predicts wireless will survive on some level here in northern Michigan.

The Competition

In theory, 186networks has competitors in the wireless field, most notably Cherry Capital Connection.

“But the truth is, wireless companies mostly compete with [cable company] Charter,” he said, adding that satellite dish providers also fall outside the category of direct competitors due to bandwidth restrictions and pricing structures.