Re: [WISPA] Quesiton on Funding / Financing / Capital Availability

[Travis Johnson]

Lease, lease, lease. Why spend money each month paying for CPE up front for every customer? Are you doing that with bandwidth? Are you doing that with employees? We spend $7 per month per CPE for 36 months. It's just part of "doing business"... just like insurance, bandwidth, payroll, etc. It's one of those monthly expenses that is just part of operating in this industry. We then use the install fee to cover the truck roll, router, etc. So we are making a profit on every single customer we install starting from the day they are installed. Travis Microserv jp wrote: On Thu, May 21, 2009 at 10:49:01AM -0500, Charles Wu wrote: With all the hype being generated by the stimulus bill, we have been approached by a multitude of third party financial organizations that have a renewed interest in potentially financing rural broadband...now, specifically, for WISPs, in the past, equipment leasing has been a very popular option for financing, but in looking at our numbers over the past year, I've noticed a marked decline in the amount of leasing that we do - that said, I have the following questions for the listserv about financing Assuming that WISPs are still need to buy equipment... 1. Are you able to just purchase equipment out of cash-flow organically generated from operations Yes, unless it's a large project on a short time table. We've been buying wireless gear for 11 years now. In the early years, our wireless deployment was funded by dialup revenue, but now it's a self-sustaining major part of our business, and dialup is a very small part. We've had some loans for big deployments in the past, and the amounts of money spent on loan repayment currently are comparable to what we'd be spending on equipment to meet current demands. So as those are paid off, we have more money to spend on gear each month. We'll save our loan tolerance for big projects that require high capex, and buy customer radios and modest project infrastructure out of our pocket every month or a shorter term line of credit. Things like Alvarion's comnet let us get quantity pricing breaks on radios as long as we commit to regular CPE deliveries of certain quantity levels, so that works good for cash-flow focused ISPs. 2. Have you gone to more traditional forms of money (e.g., bank / SBA / RUS loans)? We've had bank loans and SBA backed bank loans in the past. 3. Are you doing more vendor leasing programs (e.g., Motorola 3% financing deal) No. 4. Have you not been able to borrow money due to the credit crunch (e.g., not deploying as aggressively) 5. Are you holding off on deployments because of the economy I could be deploying a lot more if the economy were better and more people were more willing to get nicer Internet services. 6. Have you gone to Agility...<cough> Louie the loanshark =) I've investigated leasing, and it appears to be a choice for when the bank doesn't want to deal with you. If I had that sort of relationship with the bank, I'd want to fix that before spending more money. Or any other thoughts / comments on this topic? -Charles -------------------------------------------------------------------------------- WISPA Wants You! Join today! http://signup.wispa.org/ -------------------------------------------------------------------------------- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/

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