Buying a telecom or internet provider in Florida

This covers small local internet providers (often fixed wireless, sometimes fiber in a few neighborhoods or rural areas), providers of business phone service and internet calling (VoIP), and firms that design and install data, phone and cabling systems in offices, condos and new buildings.

Providers earn monthly subscription fees, so their revenue repeats more reliably than most. What you're buying is mostly the subscriber base and the network that serves it: towers and rooftop sites, radios, fiber, and leases with the building and tower owners. Costs include wholesale bandwidth, site rent, equipment replacement and sending trucks out to fix outages. Installers earn project fees from general contractors, property managers and businesses, plus ongoing work for moves, additions and repairs.

A typical team is a few field technicians, a network engineer, someone who handles support and billing, and the owner, who often holds much of the technical knowledge.

• Few customers leaving each month, and an average bill that's steady or rising.
• A documented network: maps, device lists, IP addresses, passwords, and someone besides the owner who can run it.
• Long site leases that can be assigned to a new owner.
• Equipment that isn't near the end of its life, so you don't face replacing every radio right after closing.
• More than one upstream bandwidth connection, so one cut line doesn't take everyone down.
• A mix of home and business customers. Businesses usually pay more and leave less often.
• For installers: general contractors and property managers who keep coming back, and properly licensed people for the work that needs a license.

Florida regulates this business lightly. The Florida Public Service Commission (PSC) doesn't oversee broadband, VoIP or wireless service (section 364.011, Florida Statutes). Offering telecommunications service to the public, such as traditional phone lines, takes a certificate from the PSC (section 364.33). The certificate can pass to another certificate holder with notice to the PSC within 60 days. Otherwise, ask the PSC how a sale would work.

Federal rules matter more. An FCC license, such as one for licensed microwave links, can't be assigned without FCC approval first, and control of the company holding it can't change without approval either. The same goes for control of an interstate phone carrier. Broadband providers with their own facilities file coverage data with the FCC twice a year.

Florida's communications services tax applies to phone, VoIP and video service but not to internet access (chapter 202), and sellers register with the Department of Revenue. Cities and counties issue permits for work in public roads and may require registration (section 337.401). Installing data and phone wiring can require a DBPR electrical contractor license, such as the limited energy systems specialty, unless the crew works for a certificated phone or cable company or one with a local franchise (section 489.503(14)). Alarm work needs its own license. Confirm with the PSC, FCC and DBPR.

• Subscribers. Pull counts from the billing system and match them to bank deposits. Note how many are on promotional or grandfathered pricing.
• Competition. Check the FCC's National Broadband Map and ask whether a cable or fiber company, or a grant-funded project, is building in the service area.
• Site leases. Terms, rent increases and assignment clauses. A tower or building owner who won't consent to a transfer can leave customers stranded.
• Contracts. Bandwidth commitments, minimums and termination fees with the carriers that supply bandwidth.
• Storm readiness. Generators, batteries, spares, and how long restoration took after the last hurricane.
• Filings. FCC coverage reports, communications services tax returns and any federal fund contributions for phone service should be current.
• Key person. If the network lives in the owner's head, plan a long, paid handover.

• How many customers left last year, and what were the main reasons?
• If you were away for a month, who could keep the network running?
• Which sites are leased, and could those leases move to a new owner?
• What happened in the last big storm, and how long until everyone was back online?
• Is anyone building fiber or cable in your area that you're watching?
• What upgrades do you think the network will need in the next couple of years?
• Are your FCC filings and communications tax returns up to date?
• Where do most new customers come from?