KeyOn to expand to Minnesota

KeyOn Communications Holdings is in the process of acquiring Dynamic Broadband Corporation, a wireless internet service provider with operations in Iowa and Minnesota. According to a recent SEC filing description

KeyOn Communications Holdings, Inc. (“KeyOn” or the “Company”) is one of the largest rural wireless broadband providers in the United States.1 As of December 31, 2009, the Company has approximately 15,000 subscribers and operates networks covering over 50,000 square miles in 11 states across the Midwest and Western United States. The Company has grown through the consolidation of similar companies throughout its target markets as well as organic growth. KeyOn primarily focuses on providing fixed wireless broadband to rural and other areas of the country that it believes are currently underserved by traditional phone and cable companies. The Company’s current network footprint covers an addressable market of approximately 2.5 million people, as well as small to mid-sized businesses.

The filing goes on to describe their business plan a bit, which they also describe in their press release announcing the Dynamic purchase…

KeyOn is able to deliver broadband services at competitive prices to communities that it believes are ignored or underserved by traditional phone and cable companies. Generally, KeyOn’s markets are rural locations with populations of generally less than 50,000 that often lack the communications infrastructure to supply broadband access. In rural markets, broadband penetration is only 46% compared to 67% of households in urban and suburban markets, respectively.3 KeyOn believes that the lower broadband penetration rate in rural areas compared to urban and suburban areas is driven primarily by the technical limitations and high cost of providing broadband over traditional terrestrial networks in less densely populated areas. As a result, the Company believes there is a significant addressable market which is not currently being targeted by competing providers of broadband services.

KeyOn believes that it has a scalable operating platform used in the overall management and in all customer functions of the Company’s networks through its use of EngageIP, a sophisticated Operations Support Software (“OSS”) from Logisense Corporation. By centralizing operations in its Network Operations Center (“NOC”), including its OSS, and by decentralizing management around market clusters, the Company believes it is able to achieve operating costs that are significantly lower than most of its competitors. Further, by expanding into adjacent and new markets or introducing new services, the Company is able to leverage its existing network investments to improve economic returns. KeyOn believes it can significantly improve its growth opportunities while achieving positive net earnings through:

  • strategic acquisitions of wireless broadband companies that complement its market footprint;
  • “Greenfield” network builds in new, strategic markets through participation in the American Recovery and Reinvestment Act of 2009 (“ARRA”);
  • contiguous market deployments combined with organic growth within KeyOn’s existing footprint;
  • offering its subscribers bundled and additional services, such as satellite video and VoIP, to further increase average revenue per user; and
  • the strategic introduction of next generation networks, including fourth generation (4G) Worldwide Interoperability for Microwave Access (“WiMAX”), that also provide advanced services such as nomadic or mobile data and video (“4G WiMAX”).

KeyOn has applied for ARRA broadband funding in both rounds One and Two. I asked them last week if they had plans to expand regardless of the ARRA funding outcome; Jason Lazar responded that “There are significant growth opportunities for us both inside and outside of ARRA.” This move indicates a definite plan to move forward. Also it’s another move towards greater consolidation in the industry.

This entry was posted in MN, uncategorized, Wireless by Ann Treacy. Bookmark the permalink.

About Ann Treacy

Librarian who follows rural broadband in MN and good uses of new technology (blandinonbroadband.org), hosts a radio show on MN music (mostlyminnesota.com), supports people experiencing homelessness in Minnesota (elimstrongtowershelters.org) and helps with social justice issues through Women’s March MN.

1 thought on “KeyOn to expand to Minnesota

  1. Pingback: Unfunded MN ARRA Round One Applications « Blandin on Broadband

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