The Internet has grown beyond a simple tool for a small number of education and government agencies over the last few years. The commercialization of the Internet has opened a brand new market for small, medium and large commercial bodies to provide access to this huge network of opportunity for business and home users alike.
These companies are the sole providers of access to the ‘Information Super-Highway’ and it is therefore important to analyse how they have managed to survive in the past as well as their current and future success. The basis of this dissertation has concentrated mainly on the small to medium sized ISP providing services to the local business community and tends to concentrate on the issues involved here. It is important to look into periods of the past few years and how ISPs have developed into the providers that are common on the market place today. Through analysing the changes that ISPs have faced in the past, this will give a better gauge as to where the ISP needs to look to for future opportunities and more importantly, future survival.
Competition has increased greatly within the last few years in the ISP industry as larger industry players have entered the market undercutting prices of many of the services that smaller to medium sized business have offered. However at the same time the dissertation examines how these larger industries have actually helped the smaller business through outsourcing and reseller affiliation programs.
Development of the Internet & Service Providers
The Internet was the result of some visionary people in the early 1960s who saw great potential value in allowing computers to share information on research and development in scientific and military fields.
Howe, W (1998) A Brief History of the Internet
http://www0.delphi.com/navnet/faq/history.html (January 28th, 2000)
History of the Internet
The Internet has had a relatively brief but also explosive history over the last few decades. It originated from an experiment, started by the U.S. Department of Defence during the 1960s. The Department of Defence wanted to create a computer network that would continue to function in the event of a disaster, such as a nuclear war.
The network that eventually was created became ARPANET (Advances Research Projects Agency Network), which was designed to be able to function even if part of the system was damaged. ARPANET originally linked U.S. scientific and academic researchers across the country. This network was the forerunner to the Internet as it stands today.
In 1985, the National Science Foundation (NSF) created NSFNET, which was a series of networks for research and education communication. These networks today provide a major backbone communication service for the Internet.
As the Internet became more popular with higher recognition across the world, other networks started appearing that allowed the Internet backbone to grow considerably in a short period of time.
NASA and the U.S. Department of Energy contributed additional backbone facilities in the form of NSINET and ESNET while Europe implemented major international backbones such as NORDUNET and others providing connection to over one hundred thousand computers on a large number of networks.
During the course of its evolution towards the 1990s, the Internet began to integrate support for various protocol suites into its basic network structure. This basically meant that many different networks that spoke a “Different Language,” could use their language or protocols on the Internet and therefore connect to many foreign networks that was never before possible. This has evolved over the years into the Open Systems Interconnection (OSI) which has allowed the Internet to grow at an increasing rate through the merging of many different types of networks.
The development of the Internet originally came about through private networks but later led onto the development of commercial products implementing “Internet Technology.”
Towards the early 1980s, many vendors of computer networks were incorporating TCP/IP (Transfer Control Protocol / Internet Protocol), which was the basic protocol that allowed the Internet to communicate with many different systems.
During the evolutionary period of the Internet services such as Email and FTP (File Transfer Protocol) became standardised resulting in it being a lot easier for non-technical people to use these services.
The dream behind the Web is of a common information space in which we communicate by sharing information. Its universality is essential: the fact that a hypertext link can point to anything, be it personal, local or global, be it draft or highly polished. There was a second part of the dream, too, dependent on the Web being so generally used that it became a realistic mirror (or in fact the primary embodiment) of the ways in which we work and play and socialise. That was that once the state of our interactions was on line, we could then use computers to help us analyse it, make sense of what we are doing, where we individually fit in, and how we can better work together.
Berners-Lee, T (1999) The World Wide Web: A very short personal history
http://www.w3.org/People/Berners-Lee/ShortHistory (January 28th, 2000)
1989 saw a significant milestone in the development of the Internet as Tim Berners-Lee and others at the European Laboratory for Particle Physics proposed a new protocol for information distribution. This new protocol became what we know today as the World Wide Web or WWW in 1991. In 1993 a graphical Browser was developed by the name of Mosaic which was written by Marc Anderson and his team at the National Centre For Super Computer Applications (NCSA) which gave the protocol its large boost in popularity.
Later Anderson moved on to become the brains behind Netscape Corporation, which produced the most successful browser and server until Microsoft began to develop its Internet Explorer browser as a direct competitor.
The Internet was originally funded by the government and therefore was limited to research, education and government uses. It wasn’t until the early 1990s that independent commercial networks began to grow which eventually made it possible to route network traffic across to other commercial networks without passing through the government funded NSFNet Internet backbone.
As the Internet grew in popularity across the commercial sector the networks increased dramatically with an ever-increasing number of users.
Towards the end of the 1990s the Internet had grown dramatically and became more highly recognised by business and home users alike through the use of the many online services now available to the general public.
The Internet has changed greatly over the two decades since it came into existence. It will and must continue to change and evolve at the speed of the computer industry and new technologies to accommodate new services over the next decade. This evolution has brought new applications and the movement from private governmental research to the commercial world and home user.
Development of Internet Service Providers & Online Services
The growth of the Internet has mainly been due to the move towards Commercial networks and the introduction of Commercial online services. Delphi was the first commercial online service in the United States to offer Internet access to its subscribers. An email connection was implemented during July 1992 and full Internet service was available shortly after, during November 1992. At this time there were many online services available that were not directly connected to the Internet. These services made available information databases and other relevant material to its subscribers. Later on more Online Service providers began to offer full Internet access such as Compuserve, AOL (America Online), and Prodigy.
An Internet Service Provider (ISP) is a company that connects members of the general public to the Internet. It can be distinguished from an Information Service such as CompuServe or America Online by its emphasis on Internet tools such as USENET News, Gopher, WWW, etc.
Dennis, D (1998) How to become an Internet Access Provider
http://www.amazing.com/internet/ (February 21st, 2000)
As well as the larger well-known online services such as Compuserve and AOL, dedicated Internet Service Providers began to increase in popularity as the Internet grew. During 1991 PSINet, UUNET and CERFnet, (three large computer networks), decided to interconnect their networks at the Commercial Internet eXchange Association (CIX) for the purpose of commercial ISP interconnection.
This move then encouraged the entry of a number of companies into the market within the United States and eventually the interconnection from these networks to outside the U.S.
Towards the beginning of 1995, there were a few hundred CIX members, almost half of which were non-US based networks. By 1996, it was estimated that over 2000 commercial ISPs were running within the US alone. As popularity of ISPs grew largely over the last few years, the number of ISPs more than tripled in the United States to over 6500 during 1998 which has remained stable to this day.
The ISP Industry is primarily made up of small and very small businesses.
Thibodeau P (1999) Internet Service Providers Computerworld Volume 33 Issue 43 [ON PRONET]
In the Autumn of 1997, 200 companies provided three-quarters of the dial-up access within the US, and remaining half of the industry provided only one point of dial-up access.
A CIX survey in early 1997 confirmed that the industry at the time comprised primarily very small businesses with revenues of less than $1 million and with a handful of employees.
“Internet Service Provider Survey”, March 1997
During 1999, of the 6500 ISPs, it turned out that only a few were publicly traded companies. Internet Service Providers all supply the same service by making it possible for users / subscribers to exchange e-mail and access online services through the Web. The Internet is largely a collection of such providers linking a great number of networks together. There are three main types of Internet Service Provider, Tier 1, Tier 2 and Tier3 Providers.
Tier 1 providers are at the top of the network which are mainly large companies that offer extremely fast data transmission through fibre-optic lines (backbones) which therefore link the Internet together. Examples of Tier 1 providers include Cable and Wireless, AT&T, MCI WorldCom and UUnet. Tier 2 providers are connected to the Internet through the use of a Tier 1 service via a leased line permanent connection. These types of Service providers are normally national or large regional Internet Providers. The chain of connections continue to Tier 3 which provide a service restricted to generally local services with limited reach.
Obviously the closer the connection is to a Tier 1 provider, the faster the service will be, but the costs would be increased greatly. Depending on organizations individual needs, this will determine which type of ISP they will connect to.
Tier 3 providers would cater more for the home user of the Internet and small local businesses that normally would offer services through dial up accounts. This is made possible through connections established on a telephone line via a modem connected to the end users computer. In recent years Tier 3 ISPs have began to offer faster connections through digital lines such as ISDN (Integrated Services Digital Network) and the newer ISDN Highway standard opening the market for larger potential business customers.
Traditional ISPs have been around for several years and although there have been many changes across the Internet in its continuing evolution, there are several services that have remained since the early commercial providers.
Electronic mail – Communication with users throughout the world. This has been the most common and popular service on the Internet since its early days and remains so today.
World Wide Web – The Web has been the Internet’s `killer’ application in recent years. The increased popularity of the web has led to the major growth of the Internet. It includes graphics, text, and most recently multi-media.
File Transfers – The FTP protocol is one of the Internet’s most widely used services. It moves files in or out of websites to end users computers and has become more integrated with the Web in recent years.
IRC (the Internet Relay Chat program) – The IRC was one of the first Internet chat programs and continues in popularity along with newer web-based chat applications.
USENET newsgroups – Also known as Netnews, each these public discussion forums greatly resemble a computer bulletin board system (BBS). They offer members / subscribers access to information about particular subjects, with the ability to post messages and questions to the group.
Gopher – Gopher is a file retrieval program popular with the BBS community. Gopher servers enable a simple access technique to transfer information at your site to others as they request it via gopher and WWW.
WAIS – WAIS is a text searching service. This service, as with Gopher, is no longer used as widely as it once was because of advanced services through the web such as newer search engines like Yahoo and Excite.
During the mid 1990s, there were many commercial Internet Service Providers that had developed a business of providing Internet access to its customers for a subscription fee. By mid 1998 there were many national networks with thousands of regional and local providers, which continued to serve as links to end users of the Internet.
Many businesses soon learned that the basic Internet access market had extremely small profit margins and by 1998 basic Internet access was generally not regarded as a very lucrative part of the ISP commercial market.
It was therefore vital for any business offering dial-up access as a primary service to alter their business strategy towards diversification. Industry trade publication distinguished between two types of activities other than basic access than Internet Service Providers could offer.
Technically Difficult Access
High-bandwidth applications present many technical difficulties which challenge the skills and capital constraints of many ISPs. The slow diffusion of commercially viable high-speed access markets is widely regarded as a major bottleneck to the development of the next generation of Internet technologies.
Greenstein S (1998) Building The Virtual World – Esbin 1998, http://skew2.kellogg.nwu.edu/~greenste/research/papers/building.pdf (February 21st, 2000) 1998
Services that are complimentary to ‘Basic Access’
Providing additional services became essential for retaining or attracting a customer base. Many ISPs instead tried to develop additional services, such as web hosting, web-design services and network maintenance for businesses. Any of these were quite costly, as they had to be properly assembled, maintained, and marketed.
Greenstein S (1998) Building The Virtual World – Werbach 1998, http://skew2.kellogg.nwu.edu/~greenste/research/papers/building.pdf (February 21st, 2000) 1998
Although it has been outlined that the second of these options can be expensive, it can still be possible for smaller ISPs to implement services such as web-hosting and design on a smaller scale due to the cost aspect currently lower across the market.
It has however become evident that the once traditional Dial-Up ISP that charged fees for subscription cannot possibly survive in the new millennium without making drastic changes to the overall structure of the company. It has become necessary to explore additional services and newer technologies that can enhance their business in the future.
Concluding thoughts on the Development of the Internet & Service Providers
The Internet has come a long way since the introduction of ARPANET during the 1960s through to the commercialization of the network. The growth continues today at an accelerated rate giving many business organizations increased opportunities throughout this fairly recent virtual world.
It is because of these smaller Internet Service Providers that the network as a whole has become a global tool and resource to many organisations and home users today. At the same time however the market of ISPs in general has felt increased competitive forces from the larger industry players, including international telecommunication organisations and other larger commercial bodies. It has also become evident that these smaller ISPs can no longer concentrate on access services as their main source of business that once was profitable in the early days of the Internet.
Eventually Internet Access may completely fall into the hands of the larger organisations offering tier 1 access as a backbone to the network. The small to medium sized Internet business must then consider other services and diversify into newer areas to keep them ahead of the competition if they are to survive and prosper well into the new millennium.
ISPs Currently in Today’s Changing Market
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 4thenet.co.uk 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
http://www.nightcats.com/sales/free.html (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.
Security Issues to be Addressed by ISPs
The Internet has become a vast marketplace for global goods and services. For e-commerce to prosper, you have to feel safe about transmitting credit card and other financial information over the Internet. Because information traveling over the network actually passes through many computers along the way, the opportunity exists for someone to steal confidential information. Hackers also break into computers to steal data. No one really knows how often this actually happens.
Michael Lerner Productions (2000) Protect Yourself: Secure Transactions
http://www.learnthenet.com/english/html/07secur.htm (April 14th, 2000)
Business Security Needs
Security has been an ongoing issue with regard to the Internet ever since its birth. It has become more of a growing concern however in recent years with the increasing popularity of online shopping and e-commerce in general. The question of how secure the Internet really is has become a very important area of investigation. But what exactly has all this to do with the common Internet Service Provider?
A growing number of companies are placing some or all of their Internet-commerce support needs into the hands of business service ISPs or one-stop, no-hassle Web hosting service centers.
Radcliff, D (1998) Is your ISP secure?
http://www.idg.net/crd_security_7784.html (April 14th, 2000)
Unfortunately server systems used within common business ISPs have become very tempting targets for hackers and people wishing to violate the system. Once a system has been violated the harm that can be caused depends highly on the amount of sensitive information stored within the server.
In order to increase the overall security of a host server used within an ISP, a ‘Firewall’ can be implemented. A firewall can significantly improve the overall security of a server, while at the same time allowing authorized access to necessary Internet services.
‘A firewall is an approach to security; it helps implement a larger security policy that defines the services and access to be permitted, and it is an implementation of that policy in terms of a network configuration, one or more host systems and routers, and other security measures such as advanced authentication in place of static passwords. The main purpose of a firewall system is to control access to or from a protected network or server. It implements a network access policy by forcing connections to pass through the firewall, where they can be examined and evaluated.’
Wack, J (1995) The Firewall Concept
http://csrc.ncsl.nist.gov/nistpubs/800-10/node31.html#SECTION00510000000000000000
(April 19th 2000)
In order for the common ISP to protect their servers from either data corruption or more importantly, unauthorised access, a firewall becomes a necessity that must be maintained at all times. Many smaller ISPs have spent very little money in securing their servers which has ultimately led breaches of security. The main problem area for these smaller Providers lies in the fact that they do not have large resources to spend on security and hence led to less secure systems. The answer to this problem lies within outsourcing to larger network providers.
‘ISPs are vague about attacks they have experienced, saying they are unaware of actual intrusions into their networks.’
Breach of security is a major threat in any organisation, so it is vital that adequate measures have been put in place to prevent this as much as possible. However as any organisation involved with Information Technology already knows, no system is 100% secure! Many smaller ISPs as well as the larger industry players have needed to become more aware of the threats and dangers to their customers’ information. Many organisations believe that all ISPs have adequate security, but this has not always been the case, and more ISPs are realising that security has become a more important and costly but necessary area to enhance.
‘Large, backbone ISPs that have security departments are on top of their security, but it trails off when ISPs get smaller and don’t have dedicated security departments.’
Obviously the larger the ISP the larger resources are available to increase the security of their systems. As mentioned earlier, a lot of smaller ISPs are moving towards becoming VISPs offering connections to their customers through outsourcing the physical connections.
Virtual Hosting is becoming more popular with these smaller companies meaning that they no longer have to maintain the actual server storing their customers web sites and other sensitive information. The servers are mostly located with larger providers, so it has become vital that these smaller ISPs choose a reputable large company in order to host their customers data while providing adequate security against malicious attacks. It has become much more feasible in recent months for smaller companies to take the approach of purchasing virtual server space through a larger Tier 1 Internet Service Provider.
Even in recent months ISPs have come under heavy attack from hackers. During February 2000, a group of hackers breached several e-commerce sites in the ‘distributed denial-of-service attacks’ that later hit the FBI site in the USA. This has alerted more organizations to take security issues a lot more seriously.
‘Late last month, more than 400 Internet service providers and corporate security managers formed the Alliance for Internet Security to develop a set of security guidelines for combating distributed denial of-service attacks’
As time goes by and technological advances are made, greater protection will become available for service providers of sensitive information, however unfortunately to every system, no matter how foolproof, a hacker is waiting to breach it. ISPs must stay ahead in order to keep their customers trust or the loss will be extreme.
Secure Transactions through Encryption
Security issues that ISPs face on a day to day basis does not only include information stored about their customers and web sites, but actual on-line financial transactions. The number of on-line transactions through the Internet has increased dramatically over the last year alone. More and more people are purchasing goods and services online, whether it is ‘business to business’ or ‘business to consumer’ transactions. The need for a secure means of transmitting sensitive information such as credit card details has become the fore front concern of many online merchants.
It has become necessary that consumers know when they transmit their credit card via the Internet, it will travel safely and securely to its final destination. Therefore a lot of time and money has been invested in maximising the security of online transactions throughout the Internet.
In order to transmit sensitive data or information across the Internet without anyone else being able to intercept the transmission is virtually impossible. The best way to combat this problem is through encryption whereby the party who it has initially been sent to can only interpret the information.
The most common methods of encryption on the Internet today for transmission of sensitive data involve ‘Public-Key Cryptography’ and the use of ‘Secure Servers.’
Symmetric Key Cryptography
In the past a technique called PGP (Pretty Good Privacy) or ‘Symmetric Key Cryptography’ was used in order to secure information being transmitted across networks. It basically involved encrypting and decrypting a message using a program called a ‘Key,’ which was used at both ends of the transmission. The key was normally passed to the receiving party during a different transmission and they would be able to use this in order to decrypt the sensitive data. The main problem with this method was that if the encryption program ‘Key’ was stolen during its transmission, the third party would be able to gain unauthorised access to any sensitive data captured through using that key.
Public Key Cryptography
With public-key cryptography, separate keys are used to encrypt or decrypt a message, so that nothing but the encrypted message needs to be passed along. Each party in a transaction has a “key pair” which consists of two keys with a particular relationship that allows one to encrypt a message that the other can decrypt. One of these keys is made publicly available and the other is a private key. A message encrypted with a person’s public key can’t be decrypted with that same key, but can be decrypted with the private key that corresponds to it. If you sign a transaction with your bank using your private key, the bank can read it with your corresponding public key and know that only you could have sent it. This is the equivalent of a digital signature.’
This has been a very successful method for encrypting sensitive information and sending it from one source to another. It has allowed the sender and receiver’s machines to successfully encrypt and decrypt the information so if the transmission was intercepted by a third party, they would have no means by which to decrypt the data because they would have to own the other key.
Secure Servers (SSL – Secure Socket Layer)
‘Netscape Corporation has created the best known secure server technologies. It uses a security protocol called Secure Sockets Layer (SSL), which provides data encryption, server authentication, message integrity and optional client authentication for a TCP/IP connection. When a client program connects with a secure server, they exchange a “handshake” which initiates a secure session.’
SSL is technology that allows for the secure transfer of sensitive information over the Internet. It consists of software installed in browsers such as Netscape Navigator and Internet Explorer, as well as the servers. SSL and can be easily obtained by subscribing to a Secured Service Provider or by obtaining a Seller’s Certificate and installing it on the existing secured server. Most ISPs offer the service of providing this to the business either through their own services or through larger affiliate links to the ISP.
As mentioned, financial transactions have become a vital part of the Internet and e-commerce as a whole. Currently the majority of transactions carried out online involve the exchange of credit card information. Although the security of the Internet has increased greatly as a whole thanks to ‘Public Key Cryptography’ and the SSL standard, many people are still dubious as to whether or not they can trust this new form of medium to transmit their sensitive information to various e-tailors.
‘A digital certificate is an electronic “credit card” that establishes your credentials when doing business or other transactions on the Web. It is issued by a certification authority (CA). It contains your name, a serial number, expiration dates, a copy of the certificate holder’s public key (used for encrypting and decrypting messages and digital signatures), and the digital signature of the certificate-issuing authority so that a recipient can verify that the certificate is real.’
A digital certificate is basically a means of binding details about an individual or organisation to a public key used during an encrypted transmission. There are two main purposes digital certificates have:
- Provides a cryptographic key that allows another party to encrypt information for the certificates owner.
- Provides a measure of proof that the holder of the certificate is who they claim to be – otherwise they will not be able to decrypt any information received.
As we have established it is necessary to obtain a digital certificate before being able to offer secure transactions to consumers of an e-commerce business. When a server presents a certificate during an SSL handshake, the web browser then checks the certificate against its certificate database. If the certificate is already in the browsers database, or if the server certificate is signed by a Certificate Authority whose certificate is in the database, the SSL handshake is then successful.
Due to the introduction of SSL and digital certificates, e-commerce businesses have become more secure on the Internet. More importantly however, consumers trust has began to increase and therefore lead to more transactions being made online. When digital certificates and secure transactions are apparent on a website, more consumers would be less hesitant in giving sensitive information such as credit card details to be transmitted across to the business in question.
It is vital that any ISP providing e-commerce solutions to their customers who will ultimately become e-tailors selling goods and services online, can supply digital certificates and secure servers. Without offering these security services, organisations will take their business elsewhere as any company competing on the Internet for consumers must have their customers peace of mind that any details sent will be as safe as possible.
Concluding thoughts on Security & Implications of Internet Censorship
It has already started to become clear that the majority of security issues on the Internet have really fallen into the hands of the larger tier 1 network providers. Most smaller ISPs doing business today have tended to opt for the virtual approach through one of the larger providers and hence all security elements have been outsourced to these companies.
The smaller ISP has the responsibility to choose which larger network provider would best suit their needs. In the case of e-commerce solutions, it is vital that the most secure network provider has been chosen to handle secure transactions and they have the ability to hold the security transfer standard of SSL on their servers for the ISPs customer base. This does not necessarily mean that the small to medium sized Virtual ISP outsourcing the physical end of hosting has nothing else to be concerned with. They must be completely familiar with the network provider they are affiliated to and know how to carry out all the processes of setting up secure hosting for their customers as discussed earlier in the chapter. They must also be prepared to supply full support to their clients with the ability to give appropriate training and help when required.
E-Commerce and security have become two different issues that have tended to come together through the implementation of on-line sales through the web. They will continue to grow in the future and the ISP must continue to cater for needs and requirements of their customers as well as researching the newer standards and opportunities that exist within the marketplace today.
It can be argued that censorship is one of the areas that ISPs should be looking into. It has become a serious issue of the Internet offer the last few years as the increased amount of inappropriate material has become available for everyone to access. Many groups have argued that it is the Internet Service Provider that should be looking into these areas and making the net a more secure place for children and other people who may be offended by such material. However it is not the responsibility of the ISP to provide such safeguards to prevent access to sensitive material as they are merely a gateway to the Internet and have no control.
Recently more and more software titles have been made available to combat the problems with access to material on the web. As another form of diversification to target the home users of the ISP, software products could be offered as complimentary to their service. Should small to medium sized ISPs invest in providing more services to the home user when it has been made clear throughout this report that the bulk profits of these companies come from the business world and not the home user?
In conclusion to these issues of security, small to medium ISPs should be able to offer some form of software to combat the problem of censorship, however this should be a very small investment as measured in comparison to their return. It would allow the ISP to show the image of a company that cares and might win over an insignificant amount of home users. The main investment is and should remain to be in the future, security issues for E-commerce and sensitive Business information.
ITS Internet Case Study
It has been surprising to see the amount of small Internet based companies that have ‘made it big’ within a very short period of time. Perhaps it has been the pure innovation of releasing a particular service on-line or offering goods that no one else had yet thought of. Perhaps it has just been a case of the company getting in before others had giving them the edge that would continue for many years to come.
One of the biggest examples which is along side the most common services used today on the web was ‘Hotmail – the worlds first web based email service’. This became so popular that eventually the industry computer software giant Microsoft acquired the company during 1998. On the more local front in Northern Ireland, the small ISP in Belfast, Direct Net Access was recently acquired by Ulster Television.
‘UTV plc, Northern Ireland’s most popular TV channel, today announced a record 43% increase in its operating profit to £11.9m – and the acquisition of leading internet service company – Direct Net Access (DNA) for £4.25m.’
All these companies have one thing in common, they are all new on-line organisations in some cases without any physical premises; pure online business opportunities. The problem is that not all companies on the Internet have been as successful. In fact it can be argued that in today’s commercial world Internet companies are alongside the most risky business investments on the market. Stories of success often can be complimented with multiple stories of non-profitable ventures, or worse ones of failure and financial ruin.
The following case study examines the history of a small Internet Company ‘ITS Internet’, which has not been one of the fortunate success stories, along with the problems it has faced over the last year and a half.
History of ITS Internet
ITS Internet was formed in early 1999 as a specialist Internet company in Website Design and Hosting Services for local business organizations. Owner and Managing Director Anthony McMahon originally formed the company with the intention to further expand the business into a Virtual Internet Service Provider by mid 2000.
‘With the increasing need for companies to have an Internet presence, ITS Internet is well placed to deliver a high quality, professional package tailored to the individual needs of the company.’
The realisation was there that Northern Ireland was behind the rest of the world in the area of online-business. When ITS was formed, there were only a few other web design companies within Northern Ireland. Some of the larger more recognised businesses including DNET, Creative Online Media (COM) and Webforia offered tailored business web packages to the local company at various prices. Originally, the ITS strategy was to undercut the prices of all the large players in Northern Ireland and offer a fully tailored web design and hosting service for under £400. This included the following services: Domain Registration, Multiple Email Accounts, Complete web design and full hosting for one year.
At this time the MD worked solely from home and employed one web designer. Advertising was taken out in local newspapers including the Newsletter, Irish News and Belfast Telegraph. Business was very slow in the first few months of the company but eventually ITS managed to build upon a customer base of local Belfast companies. Demand meant that other designers would be required in order to take on the additional workload, so Mr. Mahon decided to move into premises in Belfast city centre and hire additional staff.
Mr. McMahon was looking to expand the business as quickly as possible so the best way in his opinion to achieve this was to move the business into the city centre at Chichester Street. ITS Internet moved into the Company shop and took on additional staff. As more business came in, a heavier advertising campaign was launched in order to gain more recognition to the local community. Eventually ITS had 8 staff in total with a mixture of Full Time, Part Time, and Contractors.
As time went by, the original strategy of developing low cost web solutions for local companies had changed greatly. ITS now wanted to expand into a full Internet Service Provider offering a mixture of different services including small solutions to full e-commerce secure transactions. A leased line was purchased and installed in the Company Shop through NTL Communications during October 1999 and two additional staff were brought in, one to maintain the network that was planned for implementation early November and a programmer for full back-end web solutions that ITS were planning as another service.
ITS had moved from a simple Web Design and Hosting company into a full Internet Services Consultancy. Mr McMahon had planned to further expand the business by purchasing physical servers to run on-site instead of through a Virtual Server which was currently in place. ITS used the American company Adgrafix (http://www.adgrafix.com) for all its hosting needs as it was both cost effective and faster than many UK hosting companies of that time.
ITS had approached a size of ten staff members and continued to promote their services through local media and business catalogues. The customer base grew larger but the problem was the company was beginning to expand beyond the sales that it was accumulating. In a major effort to boost the company’s sales, the Managing Director decided to launch ITS Internet’s new animation and 3D services at an I.T. show within the Europa Hotel in Late January, 2000.
In many ways the show was a success. The sales team managed to obtain many contacts of parties that were interested in moving their business towards e-commerce solutions, and local awareness was raised further. However the initial costs of the show needed to be covered and although there was a very positive reaction, on the short term ITS was beginning to run into short term financial problems.
Mr. McMahon was aware of this problem and pushed the sales team to pull in more short-term / small cost customers. Unfortunately at this time of year just after the New Year holidays, many local companies had already spent a lot of money on pre and post Christmas advertising. Many were still interested but it would be a few months before any kind of sale.
In the weeks that followed the show, ITS suffered increasing financial debt that needed to be resolved. There were many potential customers and existing clients that had outstanding invoices with ITS but the money was needed quickly and there didn’t seem to be any other resolution but to let several staff members go.
As time went on more staff lost their jobs as it had come to the stage where ITS could no longer survive unless major investment was brought forward. Negotiations were ongoing with several investors but unfortunately nothing came of it. Increasing bills meanwhile accrued including costs for the premises, virtual hosting costs which had increased due to the larger customer base, leased line costs and of course staff wages. In the end the company had to move out of the premises and the only staff left remaining were the Managing Director and one web designer.
ITS Internet still operates from the home of Managing Director Mr. McMahon. It seems strange that a company could have grown so quickly in such a short time, yet ended back to where it started at the beginning of 1999. Currently ITS Internet has managed to secure most of its debts and continues to run as a small web site design and hosting company, but the important question that needs to be addressed is what actually went wrong? The best way to approach this was by through the Managing Director who agreed to an interview.
ITS Internet – Current Standing & Future Possibilities
When approached with the question of why ITS Internet had failed in such a short space of time, Mr. McMahon proceeded to discuss the overall bad timing of ITS Internet’s introduction in Belfast. He believed it was down to the business sector at that stage during mid 1999 that a small Internet business such as ITS found it so difficult to thrive. This has recently been redressed during late 1999 and the beginning of 2000 by the British government’s drive towards an e-commerce society. This combined with business expenses throughout Northern Ireland at that time in preparation for Y2K protection had hindered any great amount of sales made in the web design and hosting market towards e-commerce.
When approached with the question of whether or not the growth rate of ITS was too great in comparison with the profit intake, Mr McMahon stated that this was not the problem and lack of credible sales was. At that time with the previous problems mentioned earlier, the original sales team of ITS could not manage to secure enough clients. He went on to mention the second sales person he hired was much better and if, recruited at the start, there would have been major differences.
Mr. McMahon admitted that the advertising campaign would have been different. He would not have advertised in as many newspapers, but targeted more business specific journals. According to him, there was not too much money spent on advertising or city centre premises with a leased line, as the company needed to project its image as much as possible throughout the early days in order to attract sales from larger corporations.
Analysis of ITS Internet: ITS Tomorrow
ITS is clearly still functioning as a company and will remain to do so into the future, but it has become clear that expansion of this business cannot happen overnight despite the MDs need for rapid growth. Although the Managing Director has made it clear that the company will move into premises in the future, for the present time, the company is being operated from the home of Mr. McMahon and sales over the last month have started to look positive.
Did ITS therefore fail because of its lack of timing into the market place coupled with problems of the aforementioned Y2K problems making local businesses dubious about any I.T. investments at that time. When analysing the organisation it can be argued that the original undercutting price strategy was wrong. Expansion rate of the business was just too much for the amount of sales to justify. Expenses in advertising along with expensive premises and equipment certainly did not benefit the company, but at the end of the day what help was available to this small growing company with huge potential?
The Managing Director felt that expansion was needed in order for the company to succeed in a market of fast growing competition. Perhaps lessons can be learned from ITS and now that the government is beginning to realise the potential of this market within Northern Ireland, the future of ITS and other similar companies could turn out to be a very prosperous one.
The Future of ISPs
Internet Service Providers (ISP) frequently have to face the question as to how they can protect their existing business and, at the same time, remain profitable in the future. For, on the one hand, the strong concentration process drastically shrinks the margins of pure access providing. New competitors, for example the major telecommunications companies, are flooding the market with ever cheaper offers. Prices continue to fall. And customers, who are becoming more and more “literate”, are now designing their own HTML pages. To quote a study issued by the European Union (EG DGXIII.A3) ISPs will not survive in the long term if they do not provide add-on services such as consulting or electronic publishing.
Quo vadis Internet Service Provider? (2000)
http://www.siemens.de/servers/isp/isp_us/quovadis.htm (April 25th, 2000)
Moving with the Times – Into the New Millenium
The Internet has come along way in the last few years and many small to medium sized Internet Service Providers have prospered because they were proactive to the changes faced in the market. The original dial-up access only ISP offering limited services are all but extinct, replaced or evolved into newer Internet Service Providers offering a range of services for the business market.
Past and current issues of the Internet have in effect shaped these businesses into companies offering full Internet Business Solutions to the local and international community. VISPs and virtual hosting have become common integral components that have made up the small ISP and security issues have all been out-sourced to the Tier 1 providers of the industry. It has approached the stage that these large Tier 1 providers, usually multi-international Telecommunications organisations, have become the mainstream network provider allowing the smaller ISPs to specialise to the specific service offerings for their customers.
In 1993 there were about 90 ISPs in the U.S.,” said Eric Paulak, senior Internet analyst with the Gartner Group in Stamford, Conn. “Now we’re over 4,000 but we think in the next five years that number will shrink to 500.
Abate, T (1997) The Fuzzy Future of ISPs
http://www.computernewsdaily.com/232_082097_110001_28437.html (April 27th, 2000)
Predictions have been made by many different groups of people about the future growth of Internet Service Providers. Many believe that the ISP business will consolidate as drastically as the telecommunications industry did leaving only large multinational players on the market. At the other end of the argument are those who believe the consolidation will be offset by the new ISPs that have been starting up at an increased rate over the last few years. Therefore even though many ISPs will merge and grow in size, it will still be relatively easy for new entrants into the market keeping the number of ISPs growing for a long time.
These ISPs still need to stay in business and with new technologies just around the corner. Technologies such as ADSL faster cable and digital connections and of course the newest impact upon the industry, WAP, these Internet providers need to be ready to change their business in order to suit their customer’s needs.
Internet Services of the 21st Century
ISDN (Integrated Services Digital Network) connections have been around for a while and most Internet Service Providers have been able to offer this connection service to their customers in the past. However newer connection protocols have already been launched such as ISDN 2 offering much greater transmission speeds and the most recent impact on the Cable / Telecommunications companies, ADSL.
ADSL stands for Asymmetric Digital Subscriber Line. It is new technology developed to drastically increase the speed at which you are able to download information from the Internet. ADSL uses your existing phone line. One major benefit of ADSL is that you can place a phone call and surf the Internet at the same time.
Tek Interactive Group (2000) Whats New – ADSL Access
http://www.tekinteractive.com/articles/911602340.html (April 25th, 2000)
This new technology basically allows an increase of at least five times the speed of a standard 56K (Current Modem) connection. However the main advantage of such a connection is that it is in effect a permanent connection to the Internet as no dial up connection is required. ADSL is already starting to appear in the UK throughout several different Cable and Telecommunications companies.
Does this basically mean that this connection side of the industry has been completely closed off for the standard small to medium sized ISP? It is hard to determine at the current time whether or not reseller options will be open for these businesses, as the technology is so new on the market.
In recent months, WAP has become a buzzword that most people have heard of throughout the UK and Ireland, especially with the recent news coverage concerning the licensing of UTMS technology to mobile phone companies. Over twenty billion pounds has been spent on this technology by five telecommunications companies for acquiring this license. UTMS basically enhances further the current WAP technology through vast increases in speed of voice and data transmission.
WAP stands for Wireless Application Protocol, which basically bridges the gap between the mobile world and the Internet offering numerous mobile value-added services to subscribers. WAP is a global standard and therefore any connection through WAP no matter what network is used, will be able to take full advantage of the services offered.
The mobile phone industry as a whole has grown significantly in recent years. In fact in the last year alone sales of mobile phones have accelerated dramatically to both end users and businesses. WAP will allow additional benefits to the end user through secure access to relevant Internet information and services such as messaging, banking and entertainment all through the mobile phone.
It is expected that Internet Service Providers in the future years, even the future months will exploit the true potential of WAP. However is this technology also only open to the larger corporate ISPs within the industry? Currently five major telecommunications companies have invested a substantial amount of money in licenses for the future UTMS standard, but what does this mean for the smaller Internet Business in years to come? Unless in future years this technology is made available to the smaller business provider perhaps through reseller packages, these larger corporations will essentially become the mainstream ISPs through WAP technology It can be argued that this is merely another access service through which smaller ISPs are already redundant and are constantly looking for other service opportunities.
VoIP (voice over IP – that is, voice delivered using the Internet Protocol) is a term used in IP telephony for a set of facilities for managing the delivery of voice information using the Internet Protocol (IP). In general, this means sending voice information in digital form in discrete packets rather than in the traditional circuit-committed protocols of the public switched telephone network (PSTN). A major advantage of VoIP and Internet telephony is that it avoids the tolls charged by ordinary telephone service.
VoIP (voice over IP [Internet Protocol]) (2000) http://www.whatis.com/voip.htm (April 25th, 2000)
Voice Over IP as stated above is basically another form of communicating with people across the world through sound transmission. In effect, instead of making a phone call, people can now communicate across the Internet at the local rate instead of paying higher international tolls through their telephone company.
Online organisations such as Yahoo and AOL have had Instant Messaging services available for some time now, but only recently have they added the additional service of voice over the system. Both AOL Instant Messenger (AIM) and Yahoo Messenger both have this functionality as standard. Other companies are now starting on the internet such as Net2Phone and Dialpad, have started offering Internet phone calls through their business from greatly reduced charges to free service!
VOIP is still a relatively new service and will no doubt cause more concern to telecommunications companies such as British Telecom, as long distant call charges could soon be a thing of the past. Again, however, the small to medium sized ISP will not be able to offer these services directly and only larger network carriers will be able to offer such reductions.
It has been a while now since Freeserve announced completely free Internet access with only a local call charge to pay. However, recently both NTL and Altavista both announced completely free unmetered calls to gain access to the virtual world.
NTL will be the first major company to launch a genuinely free internet access service. It is part of ntl’s vision to be the UK’s leading complete communications company. Since the internet was invented, genuinely free access has been talked about as the force needed to bring the internet into every home. Well, now all the talking can stop. Every ntl residential telephone customer will soon be able to enjoy free access.
Free Internet Calls (2000) http://www.askntl.com/freeinternet/default.asp (April 27th, 2000)
As they stated, NTL now offer free local Internet access to homes across the UK and Ireland. NTL do however require that the user is a customer of theirs before offering the service and they spend at least £10 per month on telephone calls to qualify for this offer.
The other company that recently announced completely free access was Altavista who have announced that their free unmetered Internet service will be available soon at a one off set-up charge.
AltaVista UK users will soon have the opportunity to register for the service called “AltaVista Internet Access”. Although there will be an initial set-up fee and an annual renewal charge, there will be no metered call charges.
Internet Access from AltaVista (2000) http://www.altavista.co.uk/company_info/about_av/av_access.jsp (April 25th, 2000)
Soon to follow trend was British Telecom who already currently offered several different packages for weekend and off-peak rate calls, but would offer an improved service of full access anytime for a reduced cost.
There have been discussions for some time now over the issue of free Internet access. OFTEL, the governing body of the telecommunications industry within the United Kingdom, has in recent years put more pressure on BT to offer free Internet services. This pressure has been originated mostly from the general public, who have realised that access to the Internet should be unmetered as it has been in the US for many years.
Although this dissertation has dealt mainly with the small to medium sized ISP offering services to local business across the UK and Ireland, the fact that the public has raised the pressure on free access has and will have major effects on many small service providers. Most small providers would not have the resources to offer free-call access unless through a VISP as mentioned earlier and since at the current time there are only a few organisations offering this service, the option would not be open to them. Most smaller ISPs have however diversified into alternative service providers, so for these businesses, free-call local access from larger network providers should not have a great impact on their profit margin.
But what about the other technologies mentioned earlier? It has become apparent throughout the development of Internet Service Providers that much of the business has focused on reselling opportunities. Perhaps many of these new services will be a point of referral in combination with specialised services the smaller ISP will have to provide to remain in business.
21st Century Internet Service Provider
This issue has already been emphasized as a major strategy for the small to medium ISP to continue in business today. It cannot be stressed enough of how important it is and will become for these small businesses to continually monitor for those newer opportunities keeping ahead of the competition.
Eventually, the larger commercial network providers will consume the majority of direct access to the virtual world through direct and indirect reseller services. These larger commercial bodies will no doubt comprise mainly of the telecommunications companies currently reaping from profits of long distant communication carrier services. Through analysing the trends of the market, it has become apparent that the small ISP cannot survive on access services alone. In the same way large commercial telecommunications organisations will not be able to survive alone on telephone access to long distant services. The future of Internet service providers will have to be these larger network providers who will also have to change and move with the demands of the industry. Mobile phone companies such as Orange and Vodaphone who both along with three other major players won the licenses to UTMS through WAP technology, could in essence be the ISP of the future.
The small to medium sized ISP we know today may no longer be able to use the term ISP to define an access to the Internet. Then name may stay the same, but the services may get to the stage that these companies may have absolutely nothing to do with Internet Access. The services they offer will diversify into consultancy and a range of other Internet based services for the end business customer. The access providers will consist mainly of the commercial network providers referred by these smaller consultancies that will offer all the access needs of the client.
The Future!
The popularity and recognition of the Internet originally came from the amount of small to medium ISPs throughout the USA and eventually the rest of the world. It appears the future of the Internet will reside with the large telecommunications industry giants acquiring many of the existing ISPs.
It is very difficult to predict the future, but following the trend of the evolution of Internet based companies, the future may become clearer. The existing ISPs have had no choice in the past but to diversity and change within the market in order to survive. This change must continue and eventually these small organisations will evolve into consultancy agencies offering advice on a smaller scale to businesses. Therefore the telecommunications giants of the present time, especially with regard to the mobile phone companies, will eventually become the ISPs of the future. The ISPs of today will become the consultancy agencies offering reseller services from larger organisations and building a customer portfolio through diverse services offered.
However fast the Internet has grown in the last few decades, it is still in a very young phase. WAP, ADSL, VOIP and other new services are just the beginning. This is a very exciting time to witness exactly how the future of the Internet will be shaped, but one thing is certain, the Internet of tomorrow will be the result of the achievements made by both large and small companies alike today.
References
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