Wireless Internet eyes Midwest

Monet paints picture of the Dakotas as best place to get started

North Dakota and South Dakota aren’t the first states that come to mind when
discussing early adoption of Internet technology.

By JOHN COOK
SEATTLE POST-INTELLIGENCER REPORTER

But Seattle-based Monet Mobile Networks, which plans to announce $32 million
in venture capital financing today, has chosen the rural states as the first test
beds for its $49.95 per month wireless Internet service.

Why North Dakota and South Dakota — which have a combined population of 1.3
million?

Monet Mobile CEO George Tronsrue III, a U.S. Military Academy graduate and
former Airborne Ranger, takes a phrase out of his favorite book — Sun Tzu’s "The
Art of War" — to describe the strategy.

"One of (Sun Tzu’s) commandments was, ‘Go where there is open space,’" said
Tronsrue, who has tried to follow that advice in both his military and business
careers.

"There’s no use running into strongholds if you can avoid it. And these markets
are great; there is pent-up demand and there is lack of other people trying to solve
that demand problem."

Monet Mobile Networks, a 3-year-old start-up formerly known as Burst Wireless
Inc., is tackling one of the hottest — yet most difficult — high-tech segments:
providing rural customers with anytime, anywhere Internet service through
wireless modems.

It is still in the early stages, with just 300 customers signed up in Sioux Falls,
S.D., and Fargo, N.D.

But Tronsrue said the $32 million — which brings total financing in the company to
$76 million — will help make the service faster and more reliable.

The company, with spectrum licenses in 16 markets in Kansas, Minnesota and
the Dakotas, plans to have high-speed wireless Internet networks established in
four Midwestern markets by the end of the year.

Customers pay $99.95 for a wireless modem that can be installed in desktop
computers, laptops or personal digital assistants. They are then charged $49.95
per month for the Internet connection.

Chuck Shaver, who resells computer equipment in Sioux Falls, has been using
the Monet service for the past five months on his laptop computer. While service
was "kinda sketchy" in the first few months, Shaver said he hasn’t encountered
any problems this year.

"We can take a client out to lunch and fire up our notebook and check prices and
availability of hardware," said Shaver, adding that modem speeds are a little faster
than a 56K dial-up.

"Pretty much, anything I can do sitting at my desk — now I can do anywhere in
town."

Lee Rainie, director of the Pew Internet and American Life project, a non-profit
organization that studies Internet usage in the United States, said the "potential
is fantastic" for wireless Internet services in rural America.

"You don’t have to marshal the same level of capital as laying (cable or phone)
lines to all these distant farmhouses," Rainie said. "So the potential is great, it
just hasn’t been realized yet."

Monet’s cellular towers — of which there are 12 in Sioux Falls and eight in Fargo —
cost about $300,000 each and cover 25 square miles, Tronsrue said.

"When you get to the fringes of our coverage area, you are typically standing in a
wheat or a corn field," he said.

Monet already faces some competition in Sioux Falls and Fargo. Vancouver,
Wash.-based New Edge Networks — a provider of DSL service in 360 small and
midsize U.S. cities — offers high-speed Internet in both cities.

New Edge charges $79.95 to $300 per month for Internet service and $200 to
$300 for equipment and installation, though the company occasionally waives
equipment and installation charges in exchange for long-term service contracts
with customers, said New Edge spokesman Sal Cinquegrani. About 60 to 70
percent of New Edge’s customers are businesses, he said.

Cinquegrani, who was not familiar with Monet, said wireless Internet service is not
as reliable as DSL.

"Competition is wonderful," Cinquegrani said. "But while wireless broadband
access is a viable alternative for some people, it just has not been developed to
the point today where it could produce the reliability and value that businesses
expect. It is just not there yet."

Tronsrue agrees that wireless Internet is a new technology — and like all new
technologies will experience some hiccups.

But the 45-year-old former president of XO Communications said DSL and cable
modems don’t provide the freedom of movement that wireless does.

"Our service is not going to tie people to a jack in the wall in their home office or
business," Tronsrue said. "Mobility is key, that is the differentiator."

Venture investors in Monet Mobile Networks latest financing round include
Mayfield, Soros Private Equity and Hook Partners. Strategic investors include
Qualcomm and LG Electronics, which provided much of the equipment used in
Monet’s network.

The company’s valuation remained flat with the last financing round, something
Tronsrue said "was pretty good in this environment."

"We are one of the few (telecommunications companies) that I am aware of that
did not have to either go out of business or do a down round," he said.

P-I reporter John Cook can be reached at 206-448-8075 or
[email protected]

http://seattlepi.nwsource.com/business/61639_monet11.shtml