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January 5, 2004

Southern progress | Great Works Internet sets its sights on ISP-saturated Portsmouth

By Chris Churchill

The Great Works River begins in York County and flows southwest, its waters eventually joining the Piscataqua River, the famous riparian dividing line between Maine and New Hampshire.

When Fletcher Kittredge founded his Biddeford-based Internet service provider in 1994 ˆ— the company began as Biddeford Internet and became Great Works Internet in 1997 ˆ— he did so predicting that his customer base would likewise flow from its York County birthplace toward New Hampshire, and would eventually flourish on both sides of the border. Instead, the company grew in the other direction, in Portland, Brunswick, Ellsworth and even Presque Isle, and rarely strayed beyond the confines of Maine's borders.

Until now. Great Works Internet announced in December that it has crossed the Piscataqua River and hopes to conquer the Granite State. "Portsmouth is a test market for us," Kittredge says. "We're checking to see if what we're doing in Maine will work in New Hampshire. Early indications are good, so we're considering a major push into the state."

The expansion comes as GWI celebrates its 10th anniversary, making it nearly an old sage in the ISP world. Kittredge grew up in Arundel and observed the Internet at its beginning while working in Massachusetts high-tech firms during the late 1980s and early 1990s. He founded the company with $43,000 in savings, and says he set out to build a company that combined the inventiveness of the high-tech world with the stability of traditional Maine companies.

In contrast to most high-tech firms, GWI refused venture capital, instead fueling its progress with profits already in the bank. The result was steady, stable growth, says Kittredge, rather than the explosive growth of other high-tech firms, which often imploded as violently as they grew. Even so, GWI has enjoyed brisk growth, and in late 2003 was named one of the country's 500 fastest-growing companies by Inc. magazine. The company now serves 150,000 Maine homes and businesses, employs 100 and claims $12 million in annual revenues.

A crowded, fragmented market
The push into Portsmouth ˆ— GWI broadband has been available there since September ˆ— could help sustain that growth, but the move is not without risks. Kittredge won't say how much, exactly, the company is investing to establish a beachhead in a highly competitive ISP market, but he describes it as "millions rather than hundreds of thousands" of dollars, adding that "once you put money in, you had better be able to get your customers and make it pay."

Data from New Hampshire's Department of Resources and Economic Development illustrates the competitiveness of its ISP market. There are 27 high-speed Internet providers offering service to Portsmouth, and the state ranks second nationally in the percentage of connected households. High-speed Internet access is available across the state.

That's why Kittredge describes New Hampshire as more tech savvy ˆ— as well as wealthier, more densely populated and more urban ˆ— than Maine, meaning the marketing strategies GWI used in its home state may require tweaking. "I think we have respect for how New Hampshire is different," Kittredge says, adding that the wealth and population density that make New Hampshire dissimilar are also what make it attractive. "We're the largest local ISP in Maine, and you have to go somewhere else to grow. New Hampshire seems like a logical place."

GWI is expanding from a state where roughly 70% of residents recognize its name, according to company surveys, to a state where it's largely unknown. And New Hampshire's notoriously fragmented media markets, where residents mostly watch TV from Boston, doesn't make it easy or inexpensive for new arrivals to build name recognition. To get around the problem, GWI is now touting its $29.95-per-month DSL Internet service, which it says is $5-$15 less per month than what's offered by other companies in the Portsmouth market. (Verizon's DSL service is $34.95 a month; another competitor, Comcast, charges $39.95-$59.95 monthly.) GWI is spreading the word via newspaper ads and a direct mail campaign.

Kittredge says he doesn't expect overnight results. Consumers need time ˆ— at least six months, by Kittredge's estimate ˆ— before they trust that an ISP isn't a fly-by-night outfit and are willing to subject themselves to the hassle of switching providers. (Some New Hampshire residents have long been GWI customers, but never knew it. Using its own name, the Metrocast cable company has linked with GWI since 1997 to provide broadband.) "There's a lot of skepticism around the Internet right now," says Kittredge, referring to the public's concern over the staying power of ISP's. Kittredge also acknowledges that marketing hasn't been GWI's strong point. "We're good at technology," he says. "[Knowing whether or not] we can sell it has always been the killer for us." To help alleviate that uncertainty, GWI earlier this year hired Rick Preti away from Time Warner, where he managed the Roadrunner cable Internet service, to help the company with its marketing effort.

Even though there are several local ISPs in Portsmouth, GWI sees Comcast, the Philadelphia-based cable company, as its main competition. "We've got advantages on a company like that," he says. "We can be really focused on a particular market in a way that they can't be." If GWI lowers prices or increases Internet speeds, Kittredge says, "the national company is not going to want to respond to that. They want to have one speed nationwide, and one price nationwide."

Robert Magro, owner of RR Magro Signworks in Portsmouth, switched to GWI from a local provider two months ago because he wanted "to get my speed up." He transfers a lot of large files over the Internet, and said he switched to GWI simply because "it's faster."
Of GWI's prospects, Magro believes it's largely a matter of marketing. "I think if they can get the publicity, they'll do well," he says. "I believe it's less expensive than Verizon and Comcast, and the speed is comparable."

GWI, after all, has already proven that it can compete with larger cable companies ˆ— Time Warner and Adelphia are top Maine competitors ˆ— by focusing on local needs. "No national company in their right mind is going to go to Presque Isle and Millinocket," Kittredge says, "but we do good business in those towns."

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