ISPs Currently in Today’s Changing Market

  1. The Future of ISPs
  2. ITS Internet Case Study
  3. Security Issues to be Addressed by ISPs
  4. ISPs Currently in Today’s Changing Market
  5. Development of the Internet & Service Providers
  6. Evolution of ISPs Introduction

As mentioned within the last chapter, Internet Service Providers have been forced and are currently being driven away from the traditional subscription access only service. Nowadays, many ISPs have started to offer free access to the Internet in order to drive customers to their services. The first of this kind of service within the United Kingdom was Freeserve. They originally had the backing of the Currys group to market their free Tier 3 ISP to the general public, which proved to be extremely successful. After the launch of Freeserve, many other Internet Service Providers began to offer free access through a dial-up service in order to compete within the market.

Movement away from Traditional ISPs

The movement to free ISPs was the beginning of the end of traditional subscription based access. Since it was no longer possible to compete on that service alone, many ISPs across the UK and Ireland began to adapt extremely quickly in order to compete with the “Free” services that were now available. While the larger providers began to diversify into other areas of service in order to maintain and build on its customer base, other “Free” services started to appear. Services such as web hosting, which once cost vast amounts of money were now a common free option with most larger ISPs along with virtual web addresses and numerous email accounts.

It has become necessary to offer a wider variety of services if ISPs are to remain within the ever-increasing competitive market. Complimenting the ‘traditional access’ only service, other options have started to become an integrated part of the common ISP. Modern ISPs offer services that can be broken down into five main areas:

BASIC ACCESS – Any dialup service that is slower than a T-1 line (Faster permanent network connection). Many technologies inherited from the pre-commercial days were classified as complimentary to basic access, not as a completely new service.

FRONTIER ACCESS – Any access which is faster than a T-1 line. This is becoming the common option for high-speed access necessary to the business user. It also includes ISPs that offer direct access for resale to other smaller ISPs or Data Carriers. This has allowed a newer section of the market to open up through Virtual ISPs that will be discussed more in detail later. This service also offers parts of their “backbone” as a resale to others. Commonly Frontier Access would only be found within larger corporate ISPs that have the financial backing to maintain a large network.

NETWORKING – This involves the activities associated with enabling Internet technology at the actual user location. All ISPs currently do a minimal amount of this as part of their basic service in establishing connectivity. However, an extensive array of these services, such as the regular maintenance needs, assessment of the facilities, emergency repair, and so on, often are vital in keeping and retaining business customers. The main example of such a service would be the installation and maintenance of a permanent fixed (Lease Line) to the Internet. ISPs offering such services have already made a move towards the necessary differentiation needed in order to survive within the market.

HOSTING – Traditionally, Hosting has commonly been geared towards the business customer, especially when concerned with those groups of people establishing virtual retailing sites. Hosting therefore requires the ISP to store and maintain information for access to the organisation’s customers, on their ISP servers. Until recently, most ISPs only offered a minimal amount of hosting as part of their basic service. However, more and more ISPs are beginning to realise the benefits from offering an extensive array of hosting services, including credit-card processing, site analysis tools, and so on in order to differentiate them from the rest of the basic service providers, giving them a competitive edge.

WEB DESIGN – Geared toward either home or the business user. Currently many ISPs offer some passive assistance or help pages on web page design and HTML (Hyper-Text Mark-up Language) the basic language used for creating web pages. Some ISPs are beginning to realise that extensive consulting services and custom design for users, along with services associated with design tools and web development programs may be their key to diversification. Many businesses have began to offer web design as their main service. This section of the industry has become of huge interest within Northern Ireland recently with the needs and requirements of local business to present a professional image on the web.

According to Greenstein’s report of “Building the Virtual World” when a sample of 3816 ISP companies were examined, 2295 (60.1%) have at least one other line of business other than the basic dial-up or direct Internet access. The table below shows that 1059 provide high-speed access, 789 networking, 792 web hosting, and 1385 web site design.

The problem area lies within the question, “Are all these different service options feasible for the smaller and more restricted ISP?” When examining the ISP market, it has been found that the vast majority of service providers are quite small and hence would not be able to spend large amounts of money on additional services as well as the running of their current set up.

However in recent years many services such as web hosting and high-speed access have reduced dramatically in cost allowing more resources to be allocated to web design and other customer services. Also, thanks to the advent of Virtual Internet Service Provider options, the costs of maintenance and technical support have completely been eliminated in certain cases, raising operating revenue.

A lot of smaller as well as larger commercial companies are beginning to realise the new cost effective paths they can take in regards to running their ISP, especially as the new virtual opportunities are continuously growing enabling them to stay competitive and even obtain an advantage within the market.

We have established that there are three types of Internet Service Provider, Tier 1, 2 and 3. In recent years more and more groups of people have wanted to open an ISP associated directly with their business, examples of these groups have included supermarkets such as Tesco with its recent TescoNet ISP and others through sports companies and even football teams.

Due to the enormous competition in the ISP market place, both smaller and medium sized Internet Service Providers have been struggling with financial survival. Many of these companies have already given up the traditional means of maintaining equipment continuously connected to a Tier 1 provider in order to feed the service to their customers. It is just not cost effective anymore in today’s world of ‘Free Internet Access’ to spend large amounts of money maintaining such equipment. Numerous organisations and smaller companies have began to outsource almost all of the ‘physical connection’ side of the company freeing up resources to focus on other areas of the business such as marketing and alternative Internet services.

These organisations have began to turn a group of companies who are ‘behind the scenes,’ providing everything from network connections to technical support services. Customised CDs are being produced that ‘Virtual ISPs’ can put the names of their service and homepage on as well as other services and free software they may wish to supply.

‘Richard Gannon, vice president and general manager of Community ISP, a unit of Spring Valley Communications, which provides long-distance and telecoms management for several companies in the US made this statement: “What we’re doing is making our customer look like the virtual ISP.” The company also is working with Network Two Communications Group to provide network management and a customizable CD that virtual ISPs then send to their new accounts.

From our perspective, we provide customized private label Internet service to affinity groups like church groups and alumni associations,” said Gannon. “Most of these companies have a marketing baseline in a way that they can contact the customer.

Vittore, V (1998) Meet the ‘virtual ISP’ Telephony; Chicago; Volume 235 Issue 6 [ON PRONET]

Virtual Internet Solutions can be customised and catered for almost any group or company that has a customer base to fulfil its needs. Smaller ISPs can therefore provide an equally professional package tailored with its own brand completely out-sourced to the larger Tier 1 company.

Cable and Wireless currently offer a VISP service for customers to become a Virtual Provider and offer the following services:

  • build company branding into the CD packaging, registration, browser, e-mail & website
  • deliver high-speed Internet access to the company’s customers – as
    well as e-mail and news services
  • providing end-user registration, fulfillment, billing
  • offer 24 x 7 toll-free customer support

Currently within the UK and Ireland, companies such as Cable and Wireless and UUNET have offered VISP solutions for some time now. This service has been offered to potential business providers whereby they have had the option to ‘receive Internet services at wholesale rates and have complete flexibility over the end-user pricing of the service.’

With the movement away from the traditional subscription-based Internet Service Provider, free service providers have had an enormous success within the UK as mentioned earlier. According to a Time article, ‘The response to this new service has been incredible. Net usage has gone from 5% of British homes to 17% in 18 months. Freeserve alone claims more than 1.3 million customers, and recently managed to float its shares in a deal that valued it at nearly £2 billion.’

Freeserve, which was the first ‘Free’ ISP within the UK, was able to secure some of its profits through a regulatory loophole within the telecommunications industry. This simply meant that when someone called its lines, Freeserve got a tiny cut of the local phone charge. Other profits were made through simple advertising banners displayed within the homepages of Freeserve’s web site.

An increased number of free Internet Service Providers have appeared over the last year alone and continue to increase. However, the term ‘free’ merely means the access is free, not the phone call. Smaller ISPs have been able to survive though becoming a Virtual ISP. The online company offers a virtual ISP service to its customers in return for no charges whatsoever. They basically operate in a similar way to Freeserve whereby their profits are made through users telephone calls, or in this case – their customers (Virtual ISPs) user’s calls.

ISPs Catering for Business Needs of E-Commerce

With virtual options becoming more popular and highly used across the market, ISPs in general have benefitted through the ability to put more money into other services mentioned earlier. Services such as web hosting which now has become both cost effective and highly successful within the web industry and of course design. Web site design is not a cheap option for many businesses, in fact it can be quite expensive to recruit skilled workers who can produce professional solutions.

It has however proven to be a very lucrative business service especially within Northern Ireland in the last year alone. Companies like Dnet and Webforia have managed to secure large amounts of business from the local market. Northern Ireland has been behind the rest of the world in the Internet field for a long time, but is quickly catching up, leading to more local businesses wanting to get online as quickly and cost effectively as possible.

As more businesses are becoming aware of the Internet and hence want to promote their business online, the whole area of e-commerce is starting to become a common buzzword. While certain smaller organisations want only a small presence on the web, others want full transaction based systems that will enable them to sell their products online through a full e-commerce solution.

When considering e-commerce solutions for companies in Northern Ireland, it is important to define exactly what the term e-commerce actually means:

The buying and selling of products and services by businesses and consumers over the Internet. Such a practice has exploded in the past year alone, as security issues have improved, and more and more consumers are buying and goods and services online also called e-commerce. Typically there are three types of e-commerce transactions: business to business (Cisco), business to consumer (i.e. etailers), and consumer to consumer (eBay) also called e-commerce.

Investor Words Web Site, 2000

It is has become clear that the ISP will not and can not survive in the near future through traditional means alone. As discussed, web design has become one of the new types of services that ISPs have had to offer in order to diversify into newer opportunities. Much of the target market within this area of web design who are not already established on the web or who may have a small presence, are interested solely in selling products of their organisation online. This is where the market need for e-commerce has grown vastly in a very short period of time. Companies across Northern Ireland and the UK have come to realise the benefits of moving into the e-commerce sector.

It is clear that a competitive advantage can be gained through promoting a business on the Internet, but it is equally apparent that unless certain companies do integrate their services on the web, they will be at a great disadvantage.

The most effective way for business-to-business marketers to differentiate themselves from competitors on the Web will be by building a strong brand image for their company and products.

Lamons, B (2000) Put the comm(unications) in e-commerce
Marketing News; Chicago; Apr 10, 2000 [ON PRONET]

With the ever increasing awareness of the implications of the Internet and e-commerce globally, this can only spell good news for the now, non-traditional ISP who are looking for newer services and offerings for their customers.

Many small to medium sized Internet companies have been offering web design services for some time now to compliment their traditional services. In fact many Internet based companies who are not an ISP have managed to build a business solely around the design and implementation of web solutions for businesses.

Examples of some of the fastest growing web design companies within Northern Ireland include Creative Online Media and the Manley Group. DNET (Direct Net Access) was a traditional ISP that soon learned to adapt to newer services such as web design and hosting , which was recently bought over by Ulster Television as a local success story.

It is clear to see that the advent of e-commerce has been of great benefit to Internet Service Providers for the business generated as well as the individual companies themselves. The process of an e-commerce transaction is fully automated through the system that has been set up for the customer.

Basically the process follows that a consumer moves to the merchant’s web site and from there they decide if they would like to purchase a product or service. If they decide they wish to purchase from this site, they move onto the online transaction server where any information transmitted at this stage is fully encrypted. Therefore the customer can remain at ease with the knowledge that any credit card details or sensitive information will only be received by the company they send to as well as the financial institution involved.

Once the order has been placed, the information moves through a private gateway to a ‘Processing Network,’ where the issuing and acquiring banks complete the transaction, or if there happens to be insufficient information or incorrect information, the payment is rejected. This process normally would occur over a 5-7 second delay.

In order to create a web presence in the form of an e-commerce solution there are several steps involved which the ISP or Internet Company must implement before the final product can be sold on to its end customer.

There are six main phases of the development and implementation of an e-commerce solution.

Web Site Design
The initial design of web sites in the past have been able to tell potential consumers a lot about the company wishing to sell a product or service. It is vital that the ISP or Internet Company has designed an equally professional and fast web site for the businesses’ end users. Many people on the Internet do not wish to spend vast amounts of time for web sites to load graphically intense pages and would normally look elsewhere because of the huge choice offering on the web. If the ISP’s customer is not happy with their web site it does not reflect well on the companies portfolio.

Web Hosting
As one of the other services that Internet Service Providers have come to adopt, all hosting would take place either on their physical or virtual server depending on whether or not they are a VISP.

However customers have come to expect a good uptime of their site on the ISP server along with good technical support, a fast connection to the Internet and staff that is knowledgeable about e-commerce.

Obtaining an Internet Merchant Account
In order to be able to accept credit cards over the Internet, companies wishing to accept online payments must apply to their bank for an Internet Merchant Bank Account. This usually should be relatively easy, but needs to be carried out by the individual company, as the ISP cannot provide this service.

Obtaining a Digital Certificate
Digital Certificates are also known as SSL Server Certificates that enable (Secure Socket Layer) encryption that protects any communications taking place over the transaction of a product. Therefore credit card information can be transmitted safely using this security protocol.

ISPs can share their certificate with their customers who wish to open merchant accounts for trading on their e-commerce sites. If necessary for a larger company, they can obtain their own digital certificate through companies Thawte or Verisign.

Implement with a Provider of Online Transactions
In most cases, small sized ISPs would not provide the facility of actually sending and receiving online transactions. This would normally be contracted through a company who would specialize in this type of information transmission. It all comes down to the actual needs of the company at the end of the day, i.e. how many transactions would they predict dealing with in a given month, as well as how many products / services are required. There are many online transaction providers and it is up to the ISP to research and advise the best provider. They should have several different options open according to the actual requirements of the customer, with the ability to provide the most adequate and cost effective solution.

Implementation of Shopping-Cart Software
Shopping cart software is basically the operating system that is used to allow customers to buy products and services online, while keeping track of the merchants accounts and bringing the complete e-commerce solution together.

There are many different software packages available on the market for shopping cart facilities. It is the ISPs responsibility to obtain a partnership with a shopping cart seller so they may resell the software onto their customers. Most recent shopping cart software can be fully customized to the business needs but it is vital to ensure the system used will be able to move with any changes required in the future.

More recently, with the huge interest shown in e-commerce, a multitude of services and products have become available. It’s now a possibility to find a service that will broker your Internet Merchant Account, as well as providing web site storage, a template for designing your site, shopping cart software, a form generator, a secure line for safe online ordering, and more.

Nightcats (2000) Beginners Guide to Ecommerce (March 20th, 2000)

E-commerce has become recognized internationally as a way forward for most businesses onto the Internet. It is equally apparent that this has become one of the main services that small to medium sized ISPs and Internet companies in general have been able to offer to their existing and growing customer base. Without the ability to offer this hugely recognised service, many ISPs would be losing out on large opportunities and revenue, which can only increase in the future as customers’ needs grow further with advancements and improvements throughout the Internet.

E-commerce in Northern Ireland has been taken very seriously over the last 6 months alone. This country has been behind the Internet revolution for a while but is very quickly beginning to catch up with the rest of the world. The opportunities of e-commerce have become realised and already millions of pounds are being invested within this new area of online business.

Northern Ireland’s digital communications network gives companies the greatest opportunity ever to accelerate the pace of change in the way we do business, Mr John McFall, Economy Minister, said today. To promote these exciting business opportunities, the Minister announced a £2 million package from the EU Peace and Reconciliation Fund for e-commerce initiatives.

Northern Ireland Information Service (1999)

Concluding thoughts on ISPs In Today’s Market

The ISPs that are succeeding in today’s highly competitive market are those companies that have grown to adapt to the ever changing demands of the business customer. Needs such as E-Commerce solutions and full web hosting services have become an integral part of the ISP of the new millennium. It is also important for these companies to constantly monitor for new services and offerings they will be able to provide their customers in order to retain their clients in the future.

Concentrating on the areas covered within this chapter, it is important to note that potential business customers have a higher priority above costs involved in the implementation of their organisation into the virtual world. This priority is the security of their assets as many organisations within Northern Ireland are completely new to this on-line world, and many groups still do not trust the Internet as a secure tool for credit card transactions.

Unless the ISP can deliver on the services and also maintain a highly secure site, the customer will go to another provider who can. Therefore the next important step for any ISP is to fully secure their services.

About the author

Ian Carnaghan

I am a software developer and online educator who likes to keep up with all the latest in technology. I also manage cloud infrastructure, continuous monitoring, DevOps processes, security, and continuous integration and deployment.

About Author

Ian Carnaghan

I am a software developer and online educator who likes to keep up with all the latest in technology. I also manage cloud infrastructure, continuous monitoring, DevOps processes, security, and continuous integration and deployment.

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