Sometimes what it takes to compete with a heavyweight is a series of small, methodical steps.
At least, that’s the strategy that upstart wireless Internet service providers like NetBlazr and Webpass have chosen as they try to nibble off market share from Comcast and other huge incumbents in the cable, phone, and satellite industry.
When we last checked in with Webpass, the 12-year-old San Francisco-based company was just beginning to roll out its service in Boston—its fifth market. Five months later, Webpass is available in a dozen neighborhoods around downtown Boston, as well as Cambridge, spokeswoman Jennifer Bennett says in an e-mail message.
Meanwhile, NetBlazr—founded in the Boston area in 2010—is also doubling down on expansion efforts here and pushing a faster Internet package that is more competitive with services like Webpass. NetBlazr got a boost last week with a $300,000 investment from local angel investor and CCBN co-founder Jeffrey Parker. That followed $675,000 in outside funding earlier this year from a group of investors, including Carbonite chair David Friend.
The emergence of Webpass in Boston and new money for NetBlazr mean more competition locally for Comcast and Verizon.
But one of the challenges for NetBlazr and Webpass is that, despite reporting growing customer bases, they remain niche players.
“Comcast probably has 70 percent of the market” locally, NetBlazr co-founder and CEO Jim Hanley says in a phone interview. “When Webpass comes in or any other company comes into this market, the big 800-pound gorilla probably doesn’t notice us that much.”
The bigger question is, will more consumers notice these small wireless Internet service providers?
Webpass expects to have “a few hundred customers” in the Boston area by mid-October, Bennett says. It has about 20,000 customers across its five metro markets.
Hanley won’t disclose how many customers NetBlazr has, but says the number is growing 10 percent each month and has doubled in each of the past two years. The size of its coverage network has also been doubling each year, with about 100 buildings in the Boston area outfitted with antennas on their roofs used to deliver the Internet signal, he adds. (Webpass uses similar radio-frequency wireless technology that involves line-of-sight communication between a network of antennas installed on buildings and nearby microwave towers.)
Unlike many consumer tech companies, neither NetBlazr nor Webpass are spending heavily on advertising.
Webpass—which employs nearly 100 people, including six in Boston—hasn’t taken venture capital. It has tried to attract early adopters in Boston through public relations, networking, and events, Bennett says.
“When there are more options (which Boston lacks), Webpass always shines through as the preferred provider, but when there is little to no competition it’s harder for us to make an immediate impact in a new market,” Bennett says in the e-mail. It may sound counter-intuitive, but Bennett says “People are less inclined to switch and try something new when there aren’t a lot of options. However, once they do switch, they are impressed with the service, start to tell others, and it’s like a domino effect, everyone starts following.”
NetBlazr’s new capital is being spent on building out its wireless infrastructure and growing its current staff of 12, Hanley says—not marketing. The company has mostly relied on word of mouth to drive demand, he says. (It’s telling that both Hanley and Bennett cite their companies’ Yelp ratings with pride, illustrating how important it is to them to keep customers happy.)
“We have a long list of people who are eager to have us,” Hanley says. “It’s less knocking on doors and introducing [ourselves], and more taking phone calls of people who want our service.”
Webpass and NetBlazr are among the services helping consumers “cut the cord” from cable and phone giants, and just pay for Internet and so-called over-the-top content from Netflix, Hulu, Apple TV, Amazon Instant Video, and the like. Webpass and NetBlazr are pitching themselves as alternatives to the entrenched industry leaders, offering high-speed Internet that is more affordable than a bundled services package from the “big guys” and free of contracts, hidden fees, or gimmicks, the companies say.
Webpass offers Internet speeds of 100, 200, or 500 megabits per second (Mbps) for residential customers, depending on their building’s infrastructure, for $55 per month or $500 for the year. Those prices will increase to $60 per month or $550 per year starting Oct. 1.
NetBlazr has three options for residential customers: 8-15 Mbps for $39.95 per month, 20-40 Mbps for $69.95 per month, or a “concierge” plan that promises 300 Mbps for $59.95 per month but isn’t as widely available yet, Hanley says.
The 300 Mbps option—which requires more costly infrastructure—is currently available in more than 10 buildings around Boston, and “we’re adding a couple buildings a month,” Hanley says. “The concierge service is where we’re seeing most of our growth,” he adds.
NetBlazr and Webpass are both eyeing new cities. Webpass—which already offers its service in San Francisco, San Diego, Miami, and Chicago, as well as Boston—is considering expanding to New York next year, Bennett says. Hanley says NetBlazr could make its first foray outside the Boston area in the next six months or so, perhaps to a city like Providence, RI.
If all goes well for NetBlazr, Hanley envisions it offering Internet service to customers throughout the Northeast and as far south as Washington, D.C.
This year’s influx of nearly $1 million in cash should help, although NetBlazr will have to spend it wisely because Hanley says it’s meant to last the company for the next two years.
“This capital is going to allow us to really refine our model, get our growth pace up, get our team built, and get the systems in place to allow us to go from one city to two cities to five cities to 10 cities,” he says.
If NetBlazr expands as much as Hanley hopes, it should have a successful business—even if it still barely registers on the radar of its much bigger competitors.
“In the U.S., there’s so little choice in broadband that there’s room for a lot of people to come in and improve upon the monopoly business models that exist today,” Hanley says. “You don’t need to become a $50 billion company like Comcast to make a difference in society.”