The Indispensable Host

Midwest Wireless is not getting smaller — it only seems that way. The Mankato, Minn.-based carrier, which serves 400,000 mobile customers in three states in its namesake territory, started 15 years ago with a single cell tower serving 448 customers in New Ulm, Minn., a town of just under 14,000 people. At the time, that handful of customers might be seen tooling around New Ulm — perhaps attending the town's highly regarded Oktoberfest celebration — with bag phones, the so-called portable analog devices now considered kitschy antiques, slung over their shoulders.

Since that humble beginning, Midwest Wireless has grown, proportionally, at roughly the same rapid pace as other wireless carriers. In its first five years, the network operator served about 50,000 customers (and got rid of the bag phones). During its next five years, the company grew to support 200,000 customers and made the transition to digital TDMA technology.

In the last five years, Midwest Wireless has doubled its customer base to 400,000; made the somewhat rare transition from TDMA to CDMA; evolved to support 2.5G CDMA 1×RTT; and grown its network coverage through both organic expansion and acquisition to cover 85 counties in Minnesota, Wisconsin and Iowa.

But, from a bird's eye view, Midwest Wireless appears to be shrinking — though it's not the company's fault. In the upper reaches of the mobile industry hierarchy, the few biggest carriers keep getting fewer and bigger through multibillion-dollar consolidations, further distancing themselves from the rest of the market.

Despite that trend, there are as many different kinds of service providers as there are markets for them to reach. There are regional carriers such as Midwest Wireless, serving multiple contiguous states, and there are local carriers that own licenses in just a few markets. The latter is what Midwest Wireless was 15 years ago — which is why the company is now helping smaller entities take their offerings beyond voice and into the realm of mobile multimedia.

Midwest Wireless was among the first network operators to both deploy CDMA 1x and adopt new applications using tools from Qualcomm's BREW (binary runtime environment for wireless) platform, but it did so at what Scott Bergs, the carrier's chief operating officer, called a significant investment and risk for a company Midwest's size. Now it has been offering BREW applications for more than three years, and the company is putting its experience to work for other small carriers for which a leap into the mobile content era appears extremely daunting.

“We realized that there would be other companies out there smaller than us with market pressure and operational pressure on them and that they would still need to launch these applications,” Bergs said.

That's how, during the last 18 months, the company came to develop an interesting new sideline to its core direct service provider business. Using a wholesale business model and new “group” provisioning functionality from Qualcomm, Midwest Wireless hosts BREW applications for 11 small and rural carriers and their customers.

“There is a whole group of small carriers out there that want to launch BREW applications for their customers but not go broke doing it,” Bergs said.

That fact was something of which Qualcomm itself was well aware. The CDMA chipset pioneer launched BREW in January 2001 as a flexible foundation for programming languages such as Java to be used to quickly create new applications — ringtones for example — that could be deployed to many varieties and generations of mobile handsets on a massive scale.

Within months of that launch, hundreds of software developers and applications publishers were using BREW as a basis for their creations. But for mobile carriers, use of the platform requires adoption and ongoing management of the BREW Distribution System (BDS), the service delivery and billing system that allows carriers to construct a general store of sorts for BREW applications within their own operations.

A network operator with only one or two operating licenses might see a market demand for BREW applications but be intimidated by the prospect of running the BDS to make those applications possible, said Ken May, senior director of carrier relations and global market relations for Qualcomm.

“In the earliest days of BREW, we knew from talking to a lot of small carriers and getting a lot of inquiries that these kinds of carriers were interested in offering it,” May said. “But there are certain disadvantages that small operators have, not the least of which is procuring handsets. We were struggling for a while with the idea of how we could support them, and that's really what triggered this initiative.”

As Bergs and May separately tell it, Midwest Wireless and Qualcomm both saw the same trends and challenges in the small carrier market and hit on the same idea at exactly the same time regarding the way to address the situation. May said Qualcomm specifically wanted to work with Midwest Wireless to develop a hosting model because the network operator's early adoption of BREW gave it an edge in terms of operational experience.

Bergs said Midwest Wireless executives went to visit Qualcomm in San Diego, and the company agreed to the hosting idea without hesitation.

“They were totally on board,” Bergs said. “They really wanted to reach smaller carriers. They actually identified many of the carriers that later signed up for the offering.”

Midwest Wireless and Qualcomm worked together over several months to figure out how the carrier would set up Midwest's hosting space and provide direct access to BREW applications for other carriers' customers who might live thousands of miles away from Mankato — even in another country. Qualcomm added a group functionality to its BDS so that Midwest Wireless could create and segment unique catalogs of applications for the other carriers and set up partitions between the different parties.

“The applications that people in Guam might want are different than the applications that people in Alaska might want, which are different than the applications the people in Appalachia might want, which are different than the applications the people in Oklahoma might want,” May said.

Qualcomm now offers that same group and partitioning functionality to the mobile industry's largest carriers to allow them to create multiple market-defined and customized segments of applications within their own massive BREW catalogs.

To commercially initiate the hosting service, Midwest Wireless and Qualcomm also had to make the BREW-based handsets offered by Midwest Wireless available through other small carriers and their marketing outlets. Finally, these handsets were programmed to “point” to the BREW application download server operated by Midwest Wireless so that users could purchase the applications directly in the same way that customers of Verizon Wireless or any other carrier using BREW access them.

In addition to working with Qualcomm to identify prospective small carriers with outsourcing needs, Midwest Wireless also promoted the offering through the Rural Cellular Association. In fact, it officially launched the hosting service at the group's annual convention last year.

Midwest Wireless charges a small flat fee to cover the cost of providing the service and also engages in revenue-sharing agreements with the other carriers.

The first carrier to sign up for the service was Alaska Communications Systems Group, which serves 74 communities in the predictably underserved market of Alaska. Since then, Rural Cellular Corp, Illinois Valley Cellular, Pioneer/Enid Cellular, Bluegrass Cellular and Cellcom and international carriers Guamcell Communications and Bermuda Cellular, have signed up. The two most recent additions, last month, were Golden State Cellular, which provides service to a handful of communities in the region of Yosemite National Park, and Eloqui Wireless, which has been offering mobile coverage in eastern and middle Tennessee for the last 16 years.

Bergs believes that while many of these carriers pursued a hosted applications model because of operational, financial and logistical limitations, they also ultimately might be more comfortable outsourcing a service to a like-minded small carrier rather than trying to get the attention of a vendor giant such as Qualcomm or hunting down individual applications developers to find the right services for their customers.

“Small carriers that need to launch new applications are going to have an extra level of comfort launching something like this with another carrier that has already had the experience launching it,” Bergs said. “That doesn't mean there's not a place for other third-party applications providers, but we would like to be one of those third parties.”

Midwest's success hosting BREW applications demonstrated to Bergs that there might be further utility in a hosting model. Two employees that were involved in getting the hosting service up and running have since been assigned to manage the operation on a full-time basis and develop other potential wholesale opportunities, he said.

While Midwest Wireless also offers applications based on other platforms, Bergs said BREW's scalability and reliability have made it an indispensable for rapidly growing businesses.

“BREW is so stable that we can have confidence in rolling out an applications catalog to customers who are 5000 miles away,” he said. “We have confidence that when we do that, it won't fail. BREW also just continues to grow as a system, with a lot of content and a lot of applications developers writing to it.”

Those developers, as well as manufacturers of BREW-based devices and operators of networks using BREW, convened last week in San Diego for the annual BREW conference. This year, May said, Qualcomm set aside a one-day segment of the event to address the needs of small carriers. The day's events were hosted (pun intended) by Midwest Wireless.

The small carrier that started back in New Ulm by selling bag phones has come a long way but hasn't forgotten its roots. Nor has it forgotten the challenges of operating in the shadows of increasingly larger national carriers.

Although Midwest Wireless is the only carrier operating a BREW applications hosting business, there is nothing stopping other carriers from doing so, Bergs said. Those national carriers would appear to have the operational, technical and financial wherewithal to do just that, but Bergs doesn't expect them to be coming into his small pond anytime soon.

“Why isn't anyone else doing this? I think the big carriers have kind of overlooked it as an opportunity,” he said. “But they are just more focused on competing with each other.”