Business First of Louisville - by Sarah Jeffords Pister Staff Writer
Even in the midst of an economic downturn, officials with Skyway USA LLC have signed new distribution agreements that will take the company’s satellite Internet service to international customers.
Skyway offers a self-installed satellite product that gives residents in rural areas access to high-speed Internet service, an option that typically is not available through traditional telephone and cable providers.
Canadian partner Business Television began marketing Skyway’s satellite broadband service in Canada this year under the name Skyway Canada, and Business Television is slated to launch Skyway Mexico in the second quarter, said Dwayne Hay, Skyway president and CEO.
Skyway USA also has received a letter of intent from a South American company that would market the service in a four-country region.
Another distribution partner has expressed interest in taking the service to Europe and Asia.
Fast-paced growth anticipated
Company officials believe the agreements will lead to a significant jump in sales.
Projections call for increasing revenue this year to 10 times the amount generated in 2008, said Gerald Tyrell, Skyway USA’s CFO.
He declined to disclose the company’s revenue or its number of customers. But Tyrell said that 2008 revenue was six times that of 2007.
Don Smith, chairman of the advisory board, said the company is cash-flow positive, but he declined to disclose figures.
One big push this past year has been to expand the company’s distribution channels, not only internationally but domestically.
Company officials recently established a network of dealers, such as appliance and computer stores in rural towns, that sell the service.
In addition, Skyway works with dealers that advertise the service and then handle inquiries through call centers.
The company currently has about 80 dealers who sell directly to consumers. The service also can be purchased online.
Wholesale distributors in place
On the wholesale side, Skyway recently signed an agreement with Chicago-based Agristar Global Networks Ltd., which will market the Skyway service to its agricultural customers.
Agristar offers an online subscription service that provides real-time information on weather conditions, commodities, market analysis and agricultural news.
Agristar previously worked with companies that use satellite transmission for both uploading and downloading.
But Skyway’s service is “one way,” meaning it uploads Internet requests through a dial-up connection that uses the customers’ landline or cell phone and then downloads content via satellite.
Kip Pendleton, Agristar president and co-CEO, said that allows Skyway to offer “a more economic alternative that more people across rural America will be able to access and utilize.”
Skyway also sells to wholesale customers through another Louisville firm, Broadband in a Box.
Michael Boone, president and owner of Broadband in a Box, had long sold dial-up Internet service to rural customers through a separate business that he also owned.
Customers kept asking for a high-speed alternative, Boone said. So when he learned about Skyway’s offering, he immediately wanted to get involved.
“The need is across the country,” he said.
Broadband in a Box has the exclusive rights to sell Skyway to Internet service providers and telephone companies that now offer only dial-up services in rural areas across the United States. These wholesalers then market the Skyway service to their customers under a private label.
Skyway is an easy sell, Boone said, partly because the service aligns with a federal grant program designed to bring broadband service to rural parts of the country.
Administered by the U.S. Department of Agriculture, the program offers funds to Internet service providers that make high-speed Internet service available to rural residents.
More inventory needed
Skyway’s challenge in the ensuing months will be to manage its growth, particularly by maintaining inventories of modems and related equipment included in the installation kit.
The company currently keeps enough inventory for one month of sales. As sales increase, those upfront costs might need to be financed, Tyrell said.
But Tyrell is confident that the company can achieve its growth goals even with the current economic conditions.
“The economy will affect our business,” Tyrell said. “But it will affect our business a lot less than it would if we weren’t marketing to rural America with public service mandates and marketing the low-cost service.”
Skyway USA LLC
Location: 1302 Clear Springs Trace
Employees: 25, including 10 in Louisville
Web site: www.skywayusa.com
How it compares
Other companies use satellite transmission for both uploading and downloading.
Skyway’s model enables it to offer the service at a lower cost than other national providers.
Here are fees charged by Skyway and two other national providers, based on information found on each company’s Web site.
• Skyway: Equipment cost is $49 after a rebate. Monthly service plans start at $29.95 per month.
• Hughes Network Systems LLC: Equipment cost is $299.98 after a rebate, or it can be leased for $99 upfront and $9.99 per month. Monthly service plans start at $59.99.
• WildBlue Communications Inc.: Current promotional offer is for an upfront fee of $99.95 plus shipping and handling. Equipment lease fee is $5.95 per month. Monthly service plans start at $49.95 per month.
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