ISP strategies to survival
Listen up: The 500
billion dollar Mega mergers (during Feb - Mar. 1999) of traditionally separate industries
were created to capitalize on broadband technologies that will impact all traditional ISP
services. These alliances ( Telcos, Cable companies, Media giants, Internet backbone
providers, wireless, and network vendors, all tied to Internet portals) are designed to
reduce the lions share of new service acquisition to just 10 players. The cement will be
E-commerce transactional access by merchants to a captured audience ( AOL and MSN
portals), and business to business automated flow of goods, fulfillment and settlement at
the point of sale (POS).
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"All management has
committed to a new way of thinking!"
Any thing you hear that supports the "good
Ol' way of doing business" is a smoke screen to hold together existing supply chains
while the new plans are implemented. Business as usual is a pipedream.
All the survivors of mergers, alliances or
acquisitions are the companies who have thrown out traditional thinking and embraced new
ideas. Joint virtual partnerships have created new entities, with no debts, unlimited
R&D capital and a mission to develop new market channels. ( refer to AT&T 10 year
pact with Time Warner and their plan to merge phone, data, video through cable lines and
xDSL solutions )
Quick survival plan for ISP's
Any ISP looking to get purchased had better make
plans to both shore up and grow its satisfied user base with niche' services that even
their most technology challenged employee can install and support.
ISP's need to add easily replicated IP services
to its basic dial up/ hosting clients that offers broadband, VPN, and easy sharing of
internet connections from homes, offices or both to remain attractive to investors.
Realize that the money spent to acquire a new
dialup customer is a liability not an asset. It only becomes an asset if your can support
and retain that customer and migrate them to a more profitable service level.
Ask yourself why did Sprynet and NetCom sell off
their 600,000 customers to Mindspring just this month. Better yet. Why did Mindspring's
Charles Brewer take on the risk of shelling out millions for these customers, and the
underlying network, if he didn't want to assure his shareholders that he has a new plan
that will survive the ISP crunch and come out on top? The same reasoning applies to IBM
selling off their 1 million subscribers to AT&T.
DSL is now openly challanging Cable Modem vendors
for small business accounts...see if it's available
in your area:
Now put yourself in Mindsprings CEO's shoes and
see what would attract him to your company now that there are no large ISPs left to
What is he, or any acquisition seeking company,
looking for in the 1200+ applications they just received from a online form titled "
Want to sell your ISP company to US!" off their home page??
UPdate-Mindspring sold out
and merged with Earthlink. Then Earthlink was acquired, through a hidden purchase clause
in the initial venture investment, by the Giant network provider -Sprint. Don't hold your
breath on the announced merger of MCI-Worldcom and Sprint. Sprint could care less if it
doesn't happen since it allowed the hype to help seal the deal with Mindspring/Earthlink.
You'll have to change your thinking if you'll ever
come up with the answer. That's what this whole article is about. Changing your thinking
and revamping your plan of attack. Look from the perspective of the potential buyer and
see what you can immediately do that will get you noticed by a savvy National ISP pier.
This will involve doing something different rather than just expanding on your current
core services which probably aren't state of the art technology.
Steps to take to add to your bottom
Outsource as much of your hosting and network
needs to wholesalers. This keeps you from having to implement in-house, rapid technology
changes in hardware and software. All ISPs that buy services from Network wholesalers have
twice the value per subscriber as those owning their own networks. Take a lesson from AOL
& Yahoo -outsource everything.
Try to be first to market with ADSL turnkey
broadband solutions. Find a wholesaler who has leased DSL access from a local CLEC and
aggressively market permanent connections to the small to mid sized businesses, even if
the initial area coverage is small.
For business clients seeking shared access
purchase and install only those products that take minimal installation support like Ramp
Networks products. Make sure their routers have upgrade paths from basic 56K, ADSL ( all
speeds) to T-1. All in one VPN and VoIP/PBX "office in a box" solutions
are available with 15 minute installs to corporate LANs/WANS.
Partner up with local cable companies for cross
selling home and business customers. Stay away from CLEC alliances since they have no
incentive to market products that reduce phone bills on their last mile networks.
Work in harmony with the network wholesaler to
roll out new broadband services. EcomCity will soon provide nationwide ISP services at all
Look into Wireless and Radio broadband ISP
service for special applications like teleconferencing to get foot in the door and PR
Team up with Broadcom, TUT Systems and Realtec to
go after DSL service to office parks, condos, apartments, Campus communities which own
their own wiring. Any type of broadband implementation gets local news coverage, which is
the object. Get noticed locally and nationally.
Install wideband Ethernet routers in local
businesses to relieve network congestion, while installing DSL solutions. Same install
crew and the client will perceive that you cured all their bandwidth problems after you
Give employees of any business account special
rates or free installs for home installations. Also remember that every person networks
with 250 associates and model your service/support after Mindsprings.
Update your web site to include news releases,
client success stories and industry news. Install a community center and shopping site to
host small business customers. Make it self serve with a path to professional web designs
as merchants and businesses grow their dependence on the web.
Just remember there are 10,000 other ISP's in
your shoes trying to compete using their existing business model. Little do they know that
the model has changed. The big 5 would rather lull you to sleep while they put Internet2
together and then buy you up for .10 on a dollar. The cost for AOL and Compuserve to
acquire a new customer just went from 48.00 to zero by implementing a MLM marketing plan.
Their new e-commerce initiative will allow them profit sharing on all member purchases,
which when added to banner advertising revenue, will allow them to give away dialup
service and still profit.
Don't install services or equipment that can't be
integrated into another ISP's network. Keep open standards and interoperability between
vendor equipment as part of your bylaws. Risk of "disruption of service" for any
of your customer base will negate any chance of a sale. Bad PR is the only thing worse
than no PR. Just ask the two Bill's if they agree
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Professionally designed web sites, especially
when coupled with e-commerce features, almost never migrate from their current hosting
provider. Can you design real working sites for the masses of businesses seeking a
internet refuge or make over their existing site?
Install VPN and extranet solutions for branch or
remote work applications.
Setup your own distribution channel for broadband
turnkey equipment that targets the small to medium sized ISP reseller, and have order
fulfillment done by a third party or manufacturer. ( ADSL and cable modems, NICs, VPN
quick install servers, shared internet access devices, home networking, VoIP/ PBX plug
-n-play devices, etc.)
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drop shipped to subscribers door. Lease it to them @ $ 24.95 for 36 months including
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