Bug On A Wire

Posted on Sep 1, 2009 :: Cover Story
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Posted by , Insight on Business Staff Writer

Steve Schneider, president and CEO, Hilbert Communications

On a clear summer morning, Steve Schneider stands atop the Bellin Building in downtown Green Bay and casts his eyes northwest, to the horizon and beyond, to Alaska’s Aleutian Islands. He can’t really see Alaska from here, except maybe in his mind’s eye. Behind him, mounted on a pole, is a satellite dish that can see Alaska, where about 300 people on Adak Island are counting on Schneider, the Bellin Building and Bug Tussel Wireless to provide them with wireless service.

A long-time Cellcom executive until he struck out on his own in 2001, Schneider has never met a communications dead zone he couldn’t bring to life, whether it’s Calumet County or the Aleutian Islands. Filling those gaps in the communications network and bridging the digital divide that separates urban and rural America became Schneider’s reason for being not long after he launched Intelegra, a communications consulting firm, in 2003. Before long, AT&T came calling to fill some of its “white spaces” in Wisconsin. By 2004, Bug Tussel Wireless was born and Schneider was on the fast track to what has quickly become a $20 million-plus company.

One of the first beneficiaries of Bug Tussel’s rural venture in Calumet County was Todd Thiel, president of McKinley Reserve, an international investment firm based in Hilbert – a village of about 1,000 in central Calumet County. Thiel, who moved his business in 2001 from Chicago to his hometown, was so impressed that in 2007 he threw the weight of McKinley Reserve’s vast investment resources behind Schneider’s startup. Together, they formed Hilbert Communications, a company that now has a private stock offering, with more than $23 million already committed and another $4.5 million targeted.

What impressed Thiel most was that he had spent five years trying to get Cingular, AT&T, Verizon or T-Mobile to provide adequate cell phone service to Hilbert, with no success until Schneider entered the picture in 2006.

“He had it up in 60 days and I couldn’t be happier,” says Thiel. “I call Steve and his team ‘farm kids’ because I love their work ethic and their creativity. That’s what farm kids do – you just shut up and get the job done.”

That was in stark contrast to his experience with the national and international providers.

“When I moved the business back home to Hilbert, one of the first things I found was that we didn’t have great or even good cellular service,” says Thiel. “Sometimes I would have to stand by the window with my head cocked a certain way to get reception. It was very challenging. I had projects in the Middle East and Europe, and when I traveled I had to have three phones – one for the Middle East, one for Europe and one for the U.S. We needed GSM [Global System for Mobile Communications] service so I could use just one phone wherever I went, and I also needed reliable service. I deal with people of substance and they have certain expectations. I began a massive lobbying effort and it finally looked like it was going to pay off in 2006, but then they told me it wouldn’t happen until 2010. I just came unglued and so the people at AT&T contacted Steve and told him there’s this nut in Hilbert jamming them on this and could he do something about it. And that’s how I got to know Steve.”

Paul Gehl, principal and former president of Lunda Construction and a senior advisor for McKinley Reserve, was also impressed with Schneider’s work – so much so that he became an investor and board member in Hilbert Communications.

“The first thing that attracted me was Steve himself,” says Gehl. “At Lunda Construction, we’ve always talked about investing in people first, and Steve has surrounded himself with top-notch people. I think visionary is a good word to describe Steve, both for the people he chooses to work with and the projects he goes after. He sees opportunities everywhere and because of that this is a company that’s going to continue to grow and be successful.”

Schneider would be the first to admit that none of this has been part of a well-crafted 10-year plan.

“I would say that just about everything we’ve done has come about by accident,” says Schneider. “Our motto has become ‘see a need, fill a need.’ There were so many areas where there was no service, and so there was a huge need. And then as we’ve gone forward other opportunities arose.”

From the beginning, Schneider’s career in telecommunications was, by his description, accidental. He was casting about for career options when an opportunity arose with Northeast Telephone Company in Pulaski – the precursor to Cellcom. Schneider got the job and then spent the next 11 years helping Cellcom grow its customer base by more than 40 times.

After serving Cellcom as chief operating officer and vice president of wireless services, Schneider left in 2001 to start a communications consulting business, renting office space in the Bellin Building for $80 a month. He had nothing more in mind except to make use of the knowledge and experience he’d gained to advise other communications companies, but fate had other plans for him.

“My first account was Cellcom, helping them divest of some assets in Iowa, but then AT&T came along and said they needed someone to fill in some of their ‘white spaces’ in Wisconsin,” says Schneider. “My intent was to take that idea to some other companies and see if they were interested, but no one was. So, I went back to AT&T and asked if they’d mind if I did it myself. They asked how many towers I had. I said I didn’t have any. They asked how much capital I had. I told them I had some savings. They said, ‘Well, if you can get 10 towers up in Door County within six months, you’ll be our hero.’ Six months later we got it done and that’s how Bug Tussel was born.”

The name, Schneider says, came from a late-night brainstorming session.

“It was just a group of us sitting around one night, trying to come up with a name that described rural areas,” he says. “Someone said, ‘Timbuktu’ and someone else said ‘Middle of Nowhere’ or something like that, and eventually someone said we should use the name of that town the Clampetts came from on “The Beverly Hillbillies” – Bugtussle – so that’s what we went with, only we changed the spelling.”

AT&T gave Schneider more tower projects to work on, “and then finally they said, ‘Why don’t you just do all the white spaces south of Highway 29?’ So we’ve done that.”

Schneider is proud of the fact that a lot of his “towers” are actually existing structures.

“We do erect towers,” he says, “but I am not one to clutter the landscape. Where there are already existing structures that can be utilized, it is both more cost-effective for us and more aesthetically pleasing for the general public to use rooftops, grain elevators, water tanks, silos and any other structure that can provide enough height to get signal into hard-to-get spots. This also helps with zoning, and when we do need to build a tower, municipality and county zoning authorities know that we only build towers if we absolutely have to.”

Along the way, Schneider began buying spectrum rights in Wisconsin, Michigan, Minnesota, North Dakota, Iowa and Illinois to provide frequencies to transmit cellular service for roughly 4 million potential customers. To protect his investment, Schneider acquired Beaver Dam-based Lightpoint Networks, which included fiber-optic cable from Chicago to Minneapolis, and he began creating fiber-optic rings that would also connect Madison, Milwaukee, Green Bay, Appleton, Oshkosh, Fond du Lac and Wausau. By the end of this year, Schneider says, the fiber ring will include Shawano, Clintonville, Marion, Wausau and Thorp. In the process, Bug Tussel spawned other companies, including Cloud 1, Dakota Wireless, JustKake Investments and Michigan Wireless. SpiraLight Network was created by the acquisition of Lightpoint.

The project to upgrade wireless service in Hilbert was the happy circumstance that has allowed Schneider to expand well beyond what he imagined when he started Intelegra. The partnership with Thiel, Gehl and McKinley Reserve has helped bring Bug Tussel and its offspring under the Hilbert Communications umbrella and provided the deep-pockets investment to fund continued growth.

“When we saw what Steve had done in Hilbert and elsewhere, we saw that there was a tremendous opportunity,” says Thiel. “If I’m this rabid about wanting services in a rural area, there have to be a lot of others, and Steve just needed to be able to bring it all together. That’s the role we have been able to play, to secure the investors, to put together the package so that investors could see the compelling story that we saw.”

Opportunity led Schneider to Adak, Alaska, after Adak Telephone Company contacted Lemko Corp., an Illinois provider of switching and routing equipment, for assistance. Hilbert Communications and Lemko had already formed a partnership, called Node Two Networks LLC, which is now Adak’s link to the world.

Accidents also brought Schneider into the commercial real estate business. With a love for old buildings and needing a high point to position hubs for microwave networks, he formed a corporation to buy the historic Bellin Building in Green Bay in 2006 and the equally historic Zuelke Building in downtown Appleton in 2007. (See “Building on Success” on page 26.) “The wireless microwave then drops into our fiber-optic network for long-haul transport to Chicago, Minneapolis or points beyond,” says Schneider.

Schneider says more opportunities and “accidents” will continue to provide growth for Hilbert Communications, especially with billions of dollars in federal stimulus money available for developing rural broadband communications. His vision for Hilbert Communications is to build on the early growth, eventually developing 3,000 miles of fiber-optic cable, 400 more towers, more spectrum and advancing communications technology, especially in rural communities.

“I grew up in Reif Mills, Wisconsin, where the sign coming into and going out of town is on the same post,” says Schneider.

“Really, it is. All across the Midwest, I see small towns dying because people move to larger communities where amenities such as high-speed Internet are more readily available. I believe that the quality of life in a small town far exceeds that of life in a large urban population base and that by not having a full plate of services in these small communities, we take away their ability to be economically viable. Hilbert Communications is an equalizer – making economic development in communities of 200, 500, 1,000 or 5,000 people just as viable as Milwaukee or Chicago.”