Business Plans and Legal Issues

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A good business plan helps a business obtain financing, arrange strategic alliances, attract key employees, and boost the entrepreneur's confidence. A business plan should sell the start-up to the world.

An AT&T study asked entrepreneurs to rate their overall success. Those that had written business plans (42%) rated themselves more successful than the entrepreneurs who said they had skipped the business plan stage (58%). Some of the ways in which a business plan can help a WISP related company to succeed include:

Obtaining loan approval: Since there are more businesses seeking loans than banks have money available, only those that make the best case will receive funds. A well-thought-out business plan can improve a company's chances of getting the loan because it carries an important message-the company's executives are serious enough to do formal planning. In the eyes of the loan officer, this makes their company a better risk and more deserving of a loan than applicants without a viable business plan.

Obtaining venture capital: A business plan is the first thing a potential investor asks to see. Investors use business plans as a screening device. If they are intrigued, they will ask the company's executives to come in for further discussion.

Arranging strategic partnerships: Many times a small start-up will align itself with a larger company to carry out joint research, marketing, and other activities. Such partnerships can mean gaining access to important financial, distribution, and other resources. But before a large company will even consider a strategic partnership, it will want to see their business plan.

Obtaining contracts: Before a start-up can convince another company to sign on the dotted line, they must convince the potential client that the company will be around long enough to fulfill its contractual obligations. A well-written business plan can go a long way toward reassuring a reluctant prospect.

In addition to the technical and commercial considerations discussed in this chapter, there are also legal concerns that members of the WISP industry must address. The most prominent may be liability arising from end-user abuse of the network.

Here's one way a HotSpot can run into problems. The Internet access that a HotSpot provides typically is made available via NAT (Network Address Translation), which allows administration of dynamic IP addresses by the serving ISP's DHCP (Dynamic Host Configuration Protocol) server. This means that the HotSpot's entire network is viewed as a single IP address (the HotSpot's). If an end-user performs any illegal or immoral activity via that access point, the first place law enforcement will visit is the HotSpot location. To alleviate risk, HotSpots should require end-users to login before they can gain Internet access. The login process means the HotSpot servers have captured the end-user's personal information.

Even if the venue owner provides free wireless Internet access, in order to minimize risk, it should require all end-users to register, and then authenticate the user every time they log onto the network. At a minimum, the venue owner should require its end-users to read a legal disclaimer and click on an "agree" button before they are granted access to the network.

Again, I lean on the expertise within the pre-eminent law firm of Wiley Rein & Fielding LLP (WRF) to address such issues as structuring a business model to avoid regulation. As WRF set out in its Wi-Fi primer entitled "Wi-Fi-802.11: The Shape of Things to Come":

"The Federal Communications Commission regulates, among other things, communications activities by common carriers. Services-like most ISP offerings-that are considered 'enhanced' are not, however, considered common carriage and therefore are not subject to direct FCC regulation at this time. Because there are a variety of significant tax, mandatory contribution (e.g., Universal Service Fund, Telecommunications Relay Service Fund), and other regulatory obligations (e.g., requirements to charge rates that are just and reasonable and not unjustly or unreasonably discriminatory, submission to the jurisdiction of the FCC formal and informal complaint process) attendant to common carrier status, many communications providers have sought to ensure their operations are classified as enhanced, and therefore unregulated by the FCC.

"While the issue of whether a particular provider is an enhanced service provider or a common carrier can be complex, and may warrant consultation with regulatory counsel, providers seeking to avoid common carrier obligations should, at a minimum, avoid selling service consisting of "raw" transmission capacity for a fee. Typically, ISP services considered enhanced include such a transmission component that is ancillary to the core offering, but coupled with the Internet access functionality (which typically includes enhanced attributes such as content, storage, email, and protocol conversion) that is the offering actually being sold. While most HotSpot providers and aggregators, for example, thus fall into the category of enhanced service providers, it is possible that coupling the hotspot offering with certain other types of services (e.g., a voice telephone service) could trigger FCC or state regulation."

The document can be downloaded from the WRF website at www.wrf.com/db30/cgi-bin/pubs/WiFi_Primer_Final.pdf. Want more information on common carriage and FCC obligations? Contact Eric DeSilva at <[e-mail]>.

Other legalities the WISP industry should be aware of include general end-user contracting guidelines, privacy issues, and liability issues, including those that might arise under the Communications Decency Act and the Digital Millennium Copyright Act. Wiley Rein & Felding LLP's aforementioned Wi-Fi primer also touches on all of these issues.

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