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Transitional 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 purchase....except PSInet.

  • 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 line:

  • 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. Get-in2 will soon provide nationwide ISP services at all speeds.

  • Look into Wireless and Radio  broadband ISP service for special applications like teleconferencing to get foot in the door and PR value.

  • 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 leave.

  • 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

  • Ways to distinguish yourselves from the pack

  • 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.)

  • Then add the kicker. A multi-media Intel P-350, 4.3BG, 56K V.90, 4MB video, 24xCD, WIN98, w/15" monitor, pre-loaded with any ISP's control panel S/W and choice of browser with 3 years on site service ( business or home) drop shipped to subscribers door.  Lease it to them @ $ 24.95 for 36 months including internet access.

  • The same deal can also be distributed to any large company, ISP, Telco, Utility company or to 65,000 computer VARs via PcOrder with 24/7 online ordering. Leasing passed onto end-user 100% funded through GE credit. ( National ISP wholesaler access POP #s programmed into panel) Coming soon to Get-in2 visitors at the PcStore & Wholesale club.

Your Get-in2 WebMaster ...nerd.gif (618 bytes) ...Mike Hyland
IMS newsletter to the ISP industry

"You are today what you'll be 5 years from now except for 2 things. The books you read and the people you surround yourself with!" ......Abraham Lincoln

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