Ryan Steelberg jokes that one of the reasons he waited until today to launch a new free high-speed Internet service is so AOL founder Steve Case could enjoy the holidays.
But the Orange County entrepreneur doesn’t plan to bother with such niceties much longer, as he and brother Chad Steelberg launch their newest venture, a free high-speed Internet service that they say will make AOL, @Home and just about any other Internet service obsolete within a year.
“The Internet makes giant-killers out of everyone,” says Ryan Steelberg, the younger of the two brothers at 26. “It’s survival of the fittest in real-time.”
His company, Broadband Digital Group, is offering the industry’s first advertising-supported high-speed Internet service, called FreeDSL.com, which could substantially undercut the $40- to $60-per-month cable modem and digital subscriber line connections being pushed by the likes of Cox, Comcast and Pacific Bell.
Ryan Steelberg will be chief executive while Chad Steelberg will take the less-involved role of chairman.
Taking a cue from free ISPs such as Westlake-based NetZero Inc. (which ironically, owes part of its success to the Steelbergs’ early help), the company will offer free high-speed access to anyone willing to view advertising on a portion of their computer screen. BDG plans to make money through the advertising and premium services such as pay-per-view movies, downloadable music, software purchases and cut-rate phone calls over the Internet.
Cheaper, Easier Access
Ryan Steelberg says he can afford to offer the service free because of advances that make DSL service cheaper and easier to install. And while he doesn’t see any direct competitors in sight, he expects his business plan to unsettle everyone from free dialup Internet providers to AOL and @Home, which depend primarily on the $21- to $60-per-month service fees they charge customers. (A company called Urban Media Communications offers free broadband connections to business users, but the service is tied to the company’s other services.)
The Steelbergs are scheduled to announce the FreeDSL.com service and begin signing up customers today. Service is scheduled to begin by April. Technically, the service will be a digital subscriber line, Internet connections that use upgraded telephone wiring for high-speed connections. In addition to providing a much faster connection to the Internet, DSL service doesn’t disrupt normal phone service and doesn’t slow down like shared cable modem lines.
The company will target both home and business customers.
With several Internet ventures under their belt and high-ranking officials from at least two well-known technology companies on board, Ryan Steelberg isn’t bashful about his chances this time around. He expects to have 250,000 customers signed up in the first month and 10 million customers by the end of the year. If he succeeds, that would make him the second-biggest Internet service provider in the industry, behind AOL’s estimated 18 million customers. It’d be a fitting challenge for the company, which Steelberg calls the “AOL of the next decade.”
The brothers are best known for their previous Orange County ventures: Internet advertising firms AdForce and Adsmart, as well as Winfire, which makes a web browser ad-on. Fittingly, Winfire will help launch the new service by sending e-mail to its 45,000 registered users announcing the service as an “upgrade” to the software.
Venture Funding
So far, the company has raised money from institutional investors , many of whom are OC-area CEOs , in the $1 million-to-$10 million range and expects to begin raising $50 million or more later this month to fulfill customer demand. The amount they seek will hinge on response from the company’s press tour and advertising campaign, which will include radio advertising.
BDG customers with DSL modems can use the service for free, and those who don’t have one can buy it from the company for $100 or get one free by signing up 10 other people to the service. Standard service will provide connections ranging from 384 kilobits per second to 1.5 megabits per second. The company will offer faster connections for a premium.
Questions Remain
With customers already shelling out for slower connections, demand for the new service is almost assured. What isn’t as certain is how quickly the Steelbergs can roll out the service, especially when much of it depends on the swiftness of regional telephone companies, which have been notoriously slow about upgrading equipment and installing the service for their own customers, let alone those of other companies.
And it’s not clear how quickly the special modems used for DSL service will become easier to install. Most require a visit from a telephone technician, though the newest models are supposed to be simple enough for most computer users to install themselves.
Sending technicians to customers’ homes would substantially raise the cost of providing the service, though Steelberg maintains he’s ready to do so if necessary.
“I suppose everybody believes they’re on a crusade,” he admits. “But in this case, all the pieces are in place, and we happen to be at the broadband epicenter of the world. I haven’t slept in a month, because I truly believe I’m doing something here.” n
