The one thing private equity firms typically overlook when funding startup WISPs…professional network engineers.

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Funding a new WISP

There are a number of ways to fund a startup Wireless Internet Service Provider (WISP), but the two we most commonly see as network engineering consultants at IP ArchiTechs are self funded by individuals/partners or by leveraging private equity (PE) money.

Private equity has become increasingly popular in the last few years if we are to use our consulting clients as a basis for comparison.

It’s not hard to see why, while you can (and many do) start a WISP on a shoestring budget, getting a significant chunk of initial funding to cover the costs of tower construction/leasing, network equipment, sales/marketing, etc is very attractive as it allows a WISP to build a network that might otherwise take several years of organic growth to achieve.

 

Network Engineering – the missing ingredient

Many startup WISPs are often borne out of necessity – fast, reliable or economical Internet access – one or more of these is missing in the areas we see WISPs develop.

Typically the stakeholders come from a variety of backgrounds some of which are technical and some aren’t – all of them, however, share a vision of building out Internet access and solving problems that are unique to their corner of the world.

Out of that group, probably less than 5% come out of the ranks of professional network engineers.

And this isn’t to say that you need to be a network engineer to start a successful WISP, quite the contrary, the most successful WISPs are formed by people who understand what a well-run business looks like.

But when you’re in the business of building and selling access to a service provider IP network, at some point, you will benefit from having a network engineer as part of your team – whether that happens in the beginning or down the road is the core focus of this article.

 

 

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Build it and then fix it

Build it and then fix it later is probably the most common approach when it comes to the network design of a new WISP. Many startups (understandably) want to save money anywhere they can –  consultants or tech labor costs can be steep when money is only going out and not coming in.

“Let’s just get it up and running so we can get some revenue and then we’ll fix things”

I’ve probably heard this phrase uttered a few hundred times when working with startup WISPs over the last decade.

This is the main reason bridged networks are so commonly found in startup WISPs. The network engineering is far simpler when everything is a single network and broadcast domain.

And it’s easy to see the allure of this approach – No subnetting, VLANs, routing protocols or advanced protocols like MPLS are required.

However, this is often the beginning of a painful journey for many WISPs that will result in an initial network redesign somewhere between 500 to 1000 subscribers as the broadcast domain will reach a point where performance starts to suffer and the mad dash to fix it begins.

 

The cost of redesign

Network redesigns are costly in the form of equipment, labor, downtime and lost opportunities. One of the key pieces of advice we give to prospective clients whether we work for them or not is to get someone that is a network professional involved with the network design from day one – whether it’s a consultant or an in house network engineer.

When we come in and perform a network redesign, there will be elements we use common to most ISP networks like:

  • A Subnet/VLAN plan that allows for both growth at a tower and scaling of multiple towers
  • Use of an IPAM/DCIM like Netbox
  • When to use RFC 1918 and 6598 IP space vs. Public IP space
  • IPv4/IPv6 and CGN
  • Capacity planning – what speeds and feeds are needed now and in the future
  • L2/L3 design for Data Centers/PoPs
  • L2/L3 design for towers and aggregation networks
  • Routing architecture design that includes an IGP like OSPF along with BGP and MPLS
  • Planning for Billing, DNS, DHCP and other services.
  • Security and DDoS planning

Typically, the response we get from most clients is something like “wow, I wish I’d known about all of this before I started and just done it on day one – it would have been cheaper”

The cost of going through the redesign exercise can be substantial, even for a very small WISP, it can exceed $10k and for larger WISPs, it can easily be $100k or more.

It might seem like the list above is fairly complex for a very small network with only one tower and one Internet feed, but the reality is that if you build a design that’s ready to scale and template on day one, it will be far easier to grow quickly and not have to forklift those components in at a later date with large out of pocket costs.

 

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How does Private Equity fit in?

When getting private equity firms to fund a new WISP, there are a number of budget items that go into the business plan but a plan to hire network engineers or consultants is rarely among them…why?

Many of the stakeholders involved in WISPs are often savvy tech people that are able to learn and digest new things quickly. I believe there is a perception that it’s less costly to start with a simplistic network design using the existing team and learn ‘on the fly’ rather than hire an experienced networker as a consultant or especially as an employee.

Before I get too much hate mail, there are plenty of success stories of WISPs that were built from the ground up that had to learn on the fly and were able to build a great network – so i’m not trying to paint a picture that it can’t ever be done.

The trial and error approach has a better chance of succeeding when you’re self-funded as you can gauge when you need help instead of getting hammered by investors when the network isn’t working well.

Private equity firms, however, are looking for a predictable return on their investment and skipping proper network design and planning with an experienced professional often puts a huge dent in the projected ROI for a number of reasons like:

  • Poor network performance which leads to slow or even negative subscriber growth
  • Higher install and truck roll costs due to the use of non-standardized and validated templates for subscribers
  • Network redesign costs
  • Outages due to lack of HA design
  • Excessive purchase of equipment due to lack of formal capacity planning and understanding of equipment use cases.

And the list keeps going. These are just a few of the real-world examples we have seen that get categorized as “unforeseen costs.”

 

Experience is the key for investors to controlling costs and building a reliable production network that will produce a consistent ROI.

The key takeaway here for private equity firms and entrepreneurs that are seeking money via PE is to get professional network engineering incorporated into the budget at the beginning to minimize the list of “unforseen costs” in the first 180 to 365 days of network operation.

Whether you hire a consulting firm or a a full or part time network engineer to assist with this step, the key is to get someone who has experience with ISP operations and design – with WISPs especially.

The money saved from using a design validated by a professional will be likely be substantial and rapid growth is far easier when the network is built right from the beginning – both of these put the PE Firm and the WISP Owner/Operators in a great position to succeed and return value to investors in a shorter amount of time.

 

ISP Design – Building production MPLS networks with IP Infusion’s OcNOS.

Moving away from incumbent network vendors

 

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One of the challenges service providers have faced in the last decade is lowering the cost per port or per MB while maintaining the same level of availability and service level.

And then add to that the constant pressure from subscribers to increase capacity and meet the rising demand for realtime content.

This can be an especially daunting task when routers with the feature sets ISPs need cost an absolute fortune – especially as new port speeds are released.
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Whitebox, also called disaggregated networking, has started changing the rules of the game. ISPs are working to figure out how to integrate and move to production on disaggregated models to lower the cost of investing in higher speeds and feeds.

Whitebox often faces the perception problem of being more difficult to implement than traditional vendors – which is exactly why I wanted to highlight some of the work we’ve been doing at iparchitechs.com integrating whitebox into production ISP networks using IP Infusion’s OcNOS.

Things are really starting to heat up in the disaggregagted network space after the announcement by Amazon a few days ago that it intends to build and sell whitebox switches.

As I write this, I’m headed to Networking Field Day 18 where IP Infusion will be presenting and I expect whitebox will again be a hot topic.

This will be the second time IPI has presented at Networking Field Day but the first time that I’ve had a chance to see them present firsthand.

It’s especially exciting for me as I work on implementing IPI on a regular basis and integrating OcNOS into client networks.

 

What is OcNOS?

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IP Infusion has been making network operating systems (NOS) for more than 20 years under the banner of its whitelabel NOS – ZebOS.

As disaggregated networking started to become popular, IPI created OcNOS which is an ONIE compatible NOS using elements and experience from 20 years of software development with ZebOS.

There is a great overview of OcNOS from Networking Field Day 15 here:

 

What does a production OcNOS based MPLS network look like?

Here is an overview of the EVE-NG lab we built based on an actual implementation.

 

IPI-VPLS-2

Use case – Building an MPLS core to deliver L2 overlay services

Although certainly not a new use case or implementation, MPLS and VPLS are very expensive to deploy using major vendors and are still a fundamental requirement for most ISPs.

This is where IPI really shines as they have feature sets like MPLS FRR, TE and the newer Segment Routing for OSPF and IS-IS that can be used in a platform that is significantly cheaper than incumbent network vendors.

The cost difference is so large that often ISPs are able to buy switches with a higher overall port speeds than they could from a major vendor. This in turn creates a significant competitive advantage as ISPs can take the same budget (or less) and roll out 100 gig instead of 10 gig – as an example

Unlike enterprise networks, cost is more consistently a significant driver when selecting network equipment for ISPs. This is especially true for startup ISPs that may be limited in the amount of capital that can be spent in a service area to keep ROI numbers relatively sane for investors.

Lab Overview

In the lab (and production) network we have above, OcNOS is deployed as the MPLS core at each data center and MikroTik routers are being used as MPLS PE routers.

VPLS is being run from one DC to the other and delivered via the PE routers to the end hosts.

Because the port density on whitebox switches is so high compared to a traditional aggregation router, we could even use LACP channels if dark fiber was available to increase the transport bandwidth between the DCs without a significant monetary impact on the cost of the deployment.

The type of switches that you’d use in production depend greatly on the speeds and feeds required, but for startup ISPs, we’ve had lots of success with Dell 4048s and Edge-Core 5812.


How hard is it to configure and deploy?

It’s not hard at all!

If you know how to use the up and down arrow keys in the bootloader and TFTP/FTP to load an image onto a piece of network hardware, you’re halfway there!

Here is a screenshot of the GRUB bootloader for an ONIE switch (this is a Dell) where you select which OS to boot the switch into

ONIE GRUB

The configuration is relatively straightforward as well if you’re familiar with industry standard Command Line Interfaces (CLI).

While this lab was configured in a more traditional way using a terminal session to paste commands in, OcNOS can easily be orchestrated and automated using tools like Ansible (also presenting at Networking Field Day 18) or protocols like NETCONF as well as a REST API.

Lab configs

I’ve included the configs from the lab in order to give engineers a better idea of what OcNOS actually looks like for a production deployment.

IPI-MPLS-1

 

IPI-MPLS-2

 

IPI-MPLS-3

 

IPI-MPLS-4

 

 

MikroTik PE-1

 

 

 MikroTik PE-2