Launch HN: Necto (YC W18) – ISP Starter Kit

[montasaurus]

Hey, we're Ben and Adam, the founders of Necto (https://nectolab.io). We're enabling local entrepreneurs to start their own Internet Service Providers by providing network engineering, monitoring, and business support as a service. We've seen huge improvements in last mile distribution technology in the last few years (cost, reliability, thoroughput, ease of deployment), but it hasn't translated into an explosion of ISP operators. We want to change that by allowing non-network-engineers to deploy their own networks and compete with the incumbents. Necto handles the networking setup, deals with the backbone providers, helps with distribution planning, and provides ongoing monitoring and support. The operators pick the markets, set the prices, and provide a great overall experience to their customers.

We started our own ISP here in the underserved San Francisco markets of Bayview and Portola, with more neighborhoods to come. If you live in SF, we'd love to be your ISP (https://joinnecto.com). If you're interested in starting an ISP, we're looking for an initial batch of 5 operators. You can learn more about that here: https://nectolab.io .

Our product is a combination of a few important requirements for running an ISP effectively: a centralized Network Operations Center (NOC), a Operational Support System (OSS) to manage the subscribers and get visibility into issues, and an Operator's Handbook that covers the how-to's of running an ISP (both technically and our advice on the business side). Our NOC will handle things like BGP, routing, reachability, hardware issues, upstream connectivity, and distribution provisioning. The OSS supports managing subscribers, diagnosing common issues, and performing installations. Our handbook provides a list Standard Operating Procedures for day-to-day management of the ISP and, in combination with our community of ISP operators, strategies on how to effectively launch and grow an ISP.

We charge an initial setup fee and an ongoing percentage of revenue. The initial setup fee covers us designing your initial network, sourcing your backbone connection, and the cost of the core routing stack. The ongoing percentage of revenue aligns our incentives with our operators and covers monitoring, the NOC, and ongoing enhancements for the software and community. The exact numbers depend on the scale of the network the operators are building.

We're staunch supporters of Net Neutrality and increasing broadband penetration without sacrificing privacy. We don't sell personal information or throttle traffic (and our operators won't either). We believe that the future is in highly localized ISPs competing on service quality. We're excited to tackle this problem because we've had to deal with poor internet service before, and we now know that you can make a great business out of providing better quality access. Our backgrounds are in enterprise automation technology and the home services industry (air conditioning, plumbing, electric). We're happy to answer as many questions about any of this as we can! If you're at all considering starting an ISP in your neighborhood after reading this, let us know at nectolab.io and include your HN username!

Thanks, Ben & Adam

[toomuchtodo]

Is what you're offering substantially substantive above https://startyourownisp.com?

I won't mince words: you're asking customers to outsource the core pieces of their business (netops, backhaul, billing) that they should be competent in, which puts them in a precarious position if you exhaust your runway, decide to move on to another venture, or are acquired by a less-than-ideal org.

Full disclosure: Muncipal/coop broadband proponent.

[montasaurus]

We definitely want to make sure that nobody's left high and dry in any set of circumstances. Obviously, we hope to happily partner with our operators indefinitely, but we wouldn't ask someone to commit their capital and ask their customers to depend on them without having these contingencies covered. Companies have started & run ISPs before Necto (of course), but there are significant cost and knowledge hurdles that keep a lot of operators out. I think of it like with Squarespace, where the knowledge of self-hosting a website may be outsourced, but the end result is broader access to the benefits of having an internet presence.

Also, big shout out to Graham (the author of startyourownisp.com). We met, and he's super knowledgeable. I encourage anyone interested to read his guide, it's very good. We don't see our offerings as directly competitive, and share a common goal of increasing connectivity.

[grahamburger]

Hi! Author of https://startyourownisp.com here. Thanks for the mention. I've talked to the folks at Necto and I think what they're doing is great! Hopefully my guide will be helpful to people building networks whether using Necto or not. There is certainly more to the business than what I've been able to add to the site so far.

[gumby]

> you're asking customers to outsource the core pieces of their business (netops, backhaul, billing)

An alternative way to look at this is it's a "white label franchise" business where someone not steeped in the technology can do what they know best, likely acquiring and keeping customers. I don't know if it will work, but I'm interested to see.

> Full disclosure: Muncipal/coop broadband proponent.

Something like this could probably accelerate municipal, coop, and piggyback (e.g. local water district or other small, independent utility) to take advantage of local infrastructure without having to acquire skills in a completely new domain.

[dsl]

Starting an ISP is relatively easy... get an uplink, some rack space somewhere, a router, hire a smart high school kid for tech support, and you are off to the races.

The really hard part is last-mile connectivity. You are either on someone elses lines (cable, DSL, etc), dealing with NIMBYs to bury your own lines, or working around line of site to do wireless. It isn't clear that you've solved this problem (or even from your website what you are using for last mile).

[montasaurus]

It's largely an infrastructure business at the end of the day, and not without its challenges. The real problem is that there are people willing to take on these challenges, but they get stuck as early as the "get an uplink" part of that process.

Just digging into that piece, there are a lot of decisions. Burstable or dedicated? Why are they billing based on 95th percentile? How much bandwidth should I budget per subscriber? The typical uplink quote we've seen has 6 different tables with like 80 different prices on it. If you've bought it before, you know what the tradeoffs are. If you haven't, that's a steep hill to climb just for step 1 of the process.

We deploy fixed wireless here in SF, mainly 60GHz and 5.8GHz. They require line of sight, but something like Baicells could be a good fit for areas where that's more of an issue. It's not just the NIMBYs when you go to hang/bury your own lines, the incumbents will box you out on power poles and generally make things difficult for you.

[toomuchtodo]

The hard part doesn’t scale. Takes boots on the ground geographically to assess what’s possible and implement what’s cost effective (copper or fixed wireless, maybe fiber if its greenfield and you have cheap trenching capabilities).

[a-dub]

I suppose it's a lot simpler these days compared to when ISPs provided e-mail, news, shell accounts, web hosting among other things...

That said, I wouldn't say it's "easy." You still need to track your customers through their full lifecycle with you, you still need to provision/audit both locally and in concert with CLECs and you still need to monitor, backup and keep everything up.

Moreover, if you plan to scale out in any way, you need to be principled, lest you end up with enormous flat files filled with bespoke configs that no-one even understands.

[kbaker]

Interesting project. With ARIN effectively out of IPv4 space, where do you get IPs from for a new ISP? Does it have to be transferred/purchased from an existing block? I am assuming you are setting up IPv6 as well for your customers, are you deploying some sort of CGNAT?

[montasaurus]

We've been able to source enough IPv4s for our needs so far, but we don't expect that to last forever. ARIN is cutting off the allocations, but there are still a decent amount available for lease.

[CKN23-ARIN]

The transfer market is still viable. I bought my /24 from https://www.ipv4auctions.com/

[BroadcastSunny]

Net Neutrality has expired but remember it's on the senate floor this week to bring it back. If you are for net neutrality, contact your senator. (You can find their contact information in the upper left hand corner at https://senate.gov )

Despite that, I'm glad to see that you're doing this even if net neutrality does come back. I remember the days of Earthlink and Mindspring. Now the ISP companies have become "too big to fail" and I'd like to see alternatives.

[slovette]

If you guys haven’t, you should really look at http://Sonar.Software

That piece of software has been an amazing addition to our WISP here in Colorado. Simon and his team have made extreme strides in provisioning and IPAM management and continue to make bizops more and more turnkey.

The real magic though is the whole thing is VERY API focused. The entire platform can be automated and made more powerful with a little dev time.

We do a ton of 60Ghz (ignitenet), 24Ghz, 11Ghz and 5Ghz (ubnt & mimosa) links to cover about 200 Sq miles. We’ve been mostly following a modified webpass model with redundant PTP and multiple interlinking. A few PTMP hub/spoke exist too where needed (SFH).

We’ve been at this for a few years and have a dedicated lab and geo region that we test all kinds of new ideas and equipment both wireless and new fiber tech (10g GPON, bonded RF).

[patrickg_zill]

I was under the impression (would be happy to be wrong) that the real problem was the last-mile of fiber, or DSL over copper and the dealing with the ILEC that involves. Basically the ILEC won't sell you DSL at a price that allows you to make any money. Am I correct about that?

[montasaurus]

Getting good terms from an ILEC that you're directly competing with will be difficult. We advocate building your own last mile infrastructure where possible to get around that. Here in SF, we're using fixed wireless to do that.

[atourgates]

How do you guys handle the physical side of network operations with your partners?

I live in a rural area in Idaho, and we've got a pretty great WISP here. But, I know that the owners and employees are close to retirement age, and I've often thought of approaching them to see if they have any plans to sell the business.

How do you handle physical, local network management with your partners? Things like installing hardware customer homes and businesses, managing outages at broadcast sites, and all the rest. Is that totally up to your local partners, or something you provide training/management for on any level?

[montasaurus]

We monitor your infrastructure (out of band, where possible) and let you know when things go wrong and how to fix it. When the fixing requires physical intervention, we guide you through that. Similarly for installations, where we teach you how to do them and you (or your employees or contractors) perform the physical installation. We'll help you more generally with the business as well, and share advice on how to effectively run an ISP.

Let us know if you speak with them--we're interested in having an existing ISP in the batch.

[nickreese]

Ben & Adam — Solid work. Maybe we can help expand the reach of the companies you partner with. We love helping small ISPs get their networks found by consumers looking for choice. Reach out to us at https://broadbandnow.com and let's chat.

[yodon]

In case you haven’t found this lead yet, Microsoft has had a number of funding initiatives in the past looking to encourage startups to provide better connectivity to underserved markets. The first link google found on the initiative [0] is fairly old but I’m pretty sure this was/is a multi-year effort that is likely still active and if not probably still has significant advocates within the company that are worth finding if underserved markets are relevant to Necto.

Full disclosure: co-founder of a Seattle-based startup that was invited into the Microsoft Ventures Accelerator and found it an incredibly valuable experience

[0] http://fortune.com/2015/11/16/microsoft-cheap-internet/

[montasaurus]

Very cool program, thanks! There are a few programs (both public and private) that will provide funding for starting ISPs. It really shows that access to capital isn't the main roadblock people face when starting ISPs. Or rather, that other groups are working to solve the capital access issue--we're working on solving the others.

[fiatjaf]

If you're hacker looking to start your own micro-ISP using cool stuff, I think you should take a look at https://altheamesh.com/.

[montasaurus]

I saw a demo of this in Oakland a few months ago. I thought it was super interesting, especially the way they're extending routing concepts. It feels like a very elegant technical solution.

[ejanus]

With Althea you are the driver and fully in control.

[csmajorfive]

Very cool, congrats guys. I am a Monkeybrains customer with a bunch of their equipment on my roof (I signed up for their enhanced "FTTH" campaign) and have wondered about replicating the service for myself and my neighbors if I were to move elsewhere.

Do you have an operating model for these small ISPs? Specifically I'm curious what the breakeven point is.

[montasaurus]

Thank you. How many neighbors are you thinking? It really depends on how many buildings they are in / how far apart they are, and what percentage use you as their provider. At smaller scales, it's much better to have an "in" with the building (HOA, owner, etc.) so you can market more effectively, outweighing the revenue risk of having a small number of customers.

[willart4food]

This is interesting, I do have a few questions that I could not find in your FAQ:

- how do you provision the last mile? Copper? Fiber? or Wireless?

- Do you rely on the Local Exchanges? or is it on a case-by-case basis?

- Is your typical ISP customer selling to business? Individuals? or is best-fit an apartment complex/business building?

Thank you.

[montasaurus]

We use fixed wireless for our last mile (60GHz and 5.8GHz in SF). We haven't been reliant on Local Exchanges. We'd typically be selling to residential end users (single family homes and/or MDUs).

[komali2]

From what I've read so far, this is fucking awesome. I have a couple questions about your "operators":

1. Do you mean Comcast/ATT i.e. is this only a last-mile solution that must connect to some hub of theirs?

2. "We don't sell personal information or throttle traffic (and our operators won't either)" - how do you know this is true now, will be true in the future, and if your operators are comcast/AT&T why did they agree to this? (given that they are hell incarnate and would sell a baby to satan for profit ;) )

[montasaurus]

Thanks! Going through Comcast / AT&T isn't the only path to the internet, plenty of other companies sell the backhaul services that we need--Hurricane Electric, Zayo, Cogent, CenturyLink, etc..

Monitoring traffic and throttling it are both network-level interventions that we won't implement or support in a way that can be abused like that. We don't want to expose our operators to the liability of even collecting this type of info.

[manav]

What kind of residential density would you require? Is this only feasible for MDUs?

[montasaurus]

It makes sense for a wide range of densities. Getting MDUs is really nice, because your marginal cost to serve another customer in the building is really low. Downside is that it may be more competitive. Rural areas present a different business model, where you may have to go long distances and charge enough to support the infrastructure that requires. Single family homes in suburban/urban densities are right in between.

Each of the cases can work, you just need to make sure you're running the right kind of ISP for the market.

[lsiebert]

How does your join necto privacy policy compare to local ISPs like Sonic? What about ISPs you help get started? Because your writeup about privacy is about net neutrality and throttling.

I see nothing about limiting data retention, not selling member data, or refusing to provide data voluntarily.

https://www.sonic.com/privacy-policy

[montasaurus]

Sonic has a fantastic privacy policy. For comparison, we follow all the same tenets and believe that both contractual and technical safeguards are the best way to ensure our operators do as well. We should definitely be more public about that to non-customers though--both so prospective customers know and to make sure there's public accountability behind it.

[icedchai]

What's $25k get you? One tower / roof top location?

I'm real skeptical that this is profitable on the low end.

[uniclaude]

Great! This has the potential to help a lot of Americans (and more people, even).

Quick question regarding your business model. Do you intend to charge forever, or is there any option for your customers to get out after the setup if they decide to grow their business with their own resources?

[arrel]

Amazing idea! I'd love it if the site could give some sense of how profitable the business could be, and over what timescale. I don't need specific numbers, just the fundamental expectations for a model: How do I calculate ongoing costs? How many customers does it take to get to breakeven? What's the marginal profit for a customer after that point?

It would be great to see a blog post about how joinnecto.com got off the ground. "Be the savior the Internet needs and start your own ISP" is a good slogan, but "Start a great business and save the Internet in the process" seems even better.

[djweis]

"the underserved San Francisco markets of Bayview and Portola"

Next time you fly over the midwest, look at density. If you can see your neighbor, you're probably not underserved.

[terravion]

I don't think he meant low density, he meant that even though there are a bunch of people the incumbent telcos don't actually offer service there. The Bay Area's internet is surprisingly fragmented. We couldn't get fixed broadband at the old office when I know for a fact we were less than 100ft from municipal 10 gig fiber.

[whalesalad]

It's a bummer that this looks to be a turnkey kit that does exactly what I would imagine is the most fun part of building an ISP: network engineering, building routing hardware, etc...

I see that your own ISP relies on PPPoE... is that a decision you intend to rely on for the necto lab customers (other ISPs) or was that something you had to do specifically in your own case? Have you seen any downsides to that? I know as a consumer PPPoE is kind of a pain in the butt.

[montasaurus]

Working on all the networking & routing was definitely the most fun part for me. Unfortunately, not everyone finds it nearly as interesting. We just don't feel that a distaste for the OSI model should preclude someone from running a great business.

Nice catch on the PPPoE. Our gear didn't support Option 82 at the time, but now that it does, we're switching to DHCP. PPPoE is definitely a pain in the butt.

[rjsw]

What don't you like about PPPoE ?

[amelius]

So how much money do you need upfront to start an ISP?

[stefantheard]

According to their on-boarding questionnaire $25,000USD

[xur17]

I'm really interested to see what comes out of this.

It's interesting to see you list apartment complexes as one of the target markets - I've always wondered why more complexes don't just provide internet access as a perk instead of outsourcing to Time Warner, AT&T, etc.

[deepnotderp]

Just wanted to say congrats!

Is this still bay area only or are you ready to expand to other areas?

[z3t4]

1) Roll out fiber to every house hold 2) Lease a few fibers to the nearest Internet exchange. 3) Negotiate as much peering as you can, and buy Internet transit 4) Profit 5) Work towards tier 1

[SandersAK]

This is so dope - I would love to do this in east oakland

[goatherders]

Having run a very large enterprise channel in the past, I'm a big fan of powering new businesses this way. Good luck

[wasd]

Is it $25k per site? Suppose I want to ISP several buildings. Should I budget $25k per building? How far apart can be?

[dyeje]

An ISP would be a total network I think, so it doesn't matter how many buildings you connect to.

[RyanShook]

What about US markets outside the Bay Area?

[WrtCdEvrydy]

Can you guys bring it to Miami, I will be the first one signing up for personal internet and an ISP.

[kizer]

I live in Bloomington, Illinois. So... I assume we'll be eligible in a month or two?

[notyourday]

This is a solution for optimizing existing small ISPs that are overwhelmed by growth, it is not a solution for starting an ISP.

If one cannot figure out how to solve all these problems himself or herself that ISP will go out of business in a matter of months.

[martinald]

Is this wireless or FTTB? Can't really understand.

[gonzo]

Curious what your “routing stack” looks like.

[osrec]

Do you cater to the UK market as well?

[montasaurus]

Unfortunately not in this batch--mainly because of travel and regulatory differences.

[akskos]

we really need change in the isp business (yeah, captain obvious here)

[wittedhaddock]

this is so awesome thank you hope it takes off in a big way

[Rotdhizon]

[redacted]

[jarito]

They mention several times that they require you have $25k of capital to join the program. However, that probably only covers network deployment and other costs like marketing so I would expect the actual outlay to be quite a bit higher if you want to be successful.