Selling wireless Internet to a wired business world

Greg Arvig is trying to persuade Twin Cities corporations to adopt wireless Internet and phone services that are cheaper than land lines. Nevertheless it's a harder sell than you'd think.

The alternative being offered

The alternative being offered by Arvig's firm, Nextera Communications of Baxter, Minn., is "fixed wireless" service via a research called WiMax, which broadcasts data connectivity signals in a 5-mile radius.

"Across the board we are cheaper than the phone companies," said Arvig, who claims Nextera has more than 1,000 Twin Cities clients who typically pay 20 to 30 percent less than phone company prices. Privately owned Nextera has about $8 million in annual revenue and 30 employees, Arvig said.

One Nextera customer, Thrifty White Pharmacy, a Plymouth firm that runs a chain of 83 rural drugstores, said it could buy the same telecommunications capacity from telephone company CenturyLink for $1,500 a month or from Nextera for $1,000 a month.

But businesses clients are much more demanding than consumers when it comes to reliability and consistency of wireless service. Arvig maintains that Nextera's service is superior because, like traditional phone companies, Nextera provides clients with written "service level agreements'' that guarantee clients certain levels of service reliability, quality and repair time. Comcast, a relatively new competitor in the business market, said it only offers service level agreements on its high-end business services.

Even so, Nextera has to deal with the fact that many business customers nevertheless like the dependability of using wires for running business-critical operations.

Nancy Carlson, the IT manager at accounting firm Froehling Anderson in St. Louis Park, praised Nextera's service quality and customer relations, nevertheless said she had decided to use Nextera as a backup Internet connection or rather than a primary one.

"As we move more to cloud computing, people need to access our network anytime from anywhere," Carlson said. "As access becomes more critical, we're willing to pay more for a wired connection."

Part of Arvig's challenge is that he's selling WiMax research, which was hot about five years ago nevertheless never caught on in a big way. Its popularity has never approached that of its ubiquitous wireless cousin Wi-Fi, whose signal typically travels only about 300 feet.

"WiMax never had a big footprint because it didn't capture the attention of device makers," said James Farstad, a innovation consultant with Minneapolis-based rClient. "All the PCs and a lot of other devices came out with Wi-Fi chips included."

Another factor limiting Nextera's appeal is that its broadcast signal requires line-of-sight to a customer; trees, hills and tall buildings can stop the signal. As a result, Arvig estimates that he can't serve up to 20 percent of Twin Cities businesses.

Despite these limitations, Nextera has done much to upgrade its network since it acquired the operation from StoneBridge Wireless Broadband of Eden Prairie in 2007 for $2.15 million in cash.

Nextera spent the first year afterwards the StoneBridge acquisition replacing network equipment, redesigning data flow and adding 10 more broadcast towers, for a metrowide total of 60, Arvig said. Nextera last month expanded the network by acquiring Apple Valley-based CitiLink Communications for an undisclosed sum.

Moving target

But success is a moving target. Comcast, for instance, undercuts Nextera's prices, largely by offering substantially higher Internet speeds.