Advertisement

Archive for Monday, October 21, 2002

Smaller sometimes is better

Internet service providers find niche in world dominated by giants

October 21, 2002

Advertisement

— George Prusak has shopped around for online access, trying large Internet service providers like America Online, EarthLink and AT&T.

When he saw an ad for one billed as "America's Union ISP," the president of the Colorado Postal Workers Union couldn't resist trying just one more.

His discovery?

"There's absolutely no difference just because it's union-hosted or EarthLink or AT&T," Prusak said. "I prefer to support labor unions, and that's what this does."

The Unions-America ISP has fewer than 1,000 customers, a smidgen compared with the millions using an AOL or an EarthLink.

But collectively, smaller ISPs at least 5,000 in the United States are holding their own, in some cases grabbing veteran users from larger providers.

In many respects, getting on the Internet is much like buying a car. A new Mercedes and a used Hyundai both cruise the same roads.

Some ISPs target certain regions or special-interest groups like unions, environmentalists and gun owners. A few are devoted to specific viewpoints, such as opposition to abortion.

Many are mom-and-pop operations, with a few thousand customers at most. They are generally cheaper and promise hometown relationships an ISP in Barbourville, Ky., even makes house calls for tech support.

For Timothy Johnson, starting the Unions-America ISP was about giving Internet users union-trained, union-wage customer support representatives. Though the ISP is not directly affiliated with any labor group, he's hoping to pitch union members, one by one.

"We just started 25 months ago, and we are now in over 180 cities across America," he said.

Timothy Johnson, vice president of Unions-America.Com, stands in
front of the poster he designed at his office in Vancouver, Wash.
The small computer service is just one of the growing number of
small ISPs devoted to speciality groups like unions, doctors and
lawyers.

Timothy Johnson, vice president of Unions-America.Com, stands in front of the poster he designed at his office in Vancouver, Wash. The small computer service is just one of the growing number of small ISPs devoted to speciality groups like unions, doctors and lawyers.

J.R. Cunningham started a Macintosh-centric ISP, MacOL, after an ISP he was using told him: "Call back Thursday when the Mac guy is in."

AOL remains by far the largest service provider, with 26 million U.S. subscribers and a consumer market share of 31 percent, according to International Data Corp. MSN follows at 10 percent. Other large ISPs include EarthLink, Prodigy and United Online, which operates as NetZero and Juno.

AOL and MSN can make deals for exclusive content and features, such as parental-control software. EarthLink can devote resources to controlling junk e-mail and blocking pop-up ads. Larger ISPs have redundancies in case of local network failures.

Tom Andrus, an EarthLink vice president, acknowledges the company has had complaints since addressed, he insists about placing customers on hold too long. But smaller ISPs, he said, sometimes have troubles, too.

"It's more about being the right ISP than the size," he said.

AOL's Nicholas Graham said its size permits separate toll-free numbers depending on the nature of a support question, allowing specialists to resolve problems faster.

Daryl Schoolar, a senior analyst at In-Stat/MDR, says the market shares of the giants have been declining slightly but the gains are with regional telecoms offering high-speed DSL service, not so much the mom-and-pop operations.

But with relatively low overhead and advertising costs many rely on word of mouth a smaller ISP can find a comfortable niche, IDC's Steven Harris said.

An ISP has to lease lines to get customers to the Internet, and if it's a dial-up service it needs a bank of modems for customers to call in. ISPs typically bundle access with e-mail accounts and Web hosting.

An ISP may contract out portions of the service, like tech support, or all of it to a "virtual ISP" provider that handles the back-end infrastructure.

Some tap into existing businesses. An ISP run by the North County Times near San Diego saves overhead by hooking into the billing system for newspaper delivery. Colorado's Jefferson County Public Schools sells employees subsidized dial-up access to the school network.

Still, smaller ISPs have struggled. Some were bought by rivals or larger companies like EarthLink. RxCentric Inc. is no longer actively marketing its Doctors Net Access ISP, saying competition is too intense.

David Robertson, president of Stic.net in San Antonio, said ISPs like his will have to counter by focusing more on value-added offerings, such as spam filtering and training for newcomers.

Commenting has been disabled for this item.