ISP RESOURCE CENTER

"ISPs can Find Light at the End of the Tunnel" By Henry Smith - IKANO CEO

By understanding the cyclical nature of ISPs, the importance of customer service and subscriber maximization, ISPs can find a light at the end of the tunnel.

The Independent ISP defined

Most Independent ISPs are entrepreneurial folks who opt to enter the business to gain work related and financial freedom. They are technically savvy, enjoy computers and have a strong sense of community. But, unfortunately, many find themselves over their heads dealing with severe work hours, deficient capital, and extreme debt with no relief in sight. What is originally pursued as a means to gain freedoms puts ISP owners in an inescapable virtual prison.

The Cyclical Nature

By nature and necessity, many independent ISPs begin with a small operation, generally run out of a garage or closet. They offer access locally, and are limited in the ability to offer other products and services. Telco, dial-up, bandwidth, access, backbone, infrastructure, equipment, and lease costs are overwhelming. But, optimism is renewed as subscribers are obtained and revenue is generated.

But, many times, an ISP's original server is close to or beyond capacity and they are faced with adding new infrastructure to support a growing subscriber base. New expansion costs adversely affect revenues; until the new server, like the first, is operating at or near capacity and revenues increase once again. Unfortunately, they are required, yet again, to purchase and lease additional equipment so that they can continue to grow their subscriber base.

After several upgrades, additions, and the burden of increased telco costs, many ISPs realize that it is a never-ending cycle. They are unable to take advantage of economies of scale due to size, but are unable to grow without continually accruing additional costs. Many turn to additional service offerings to augment their profit potential. Many look to hosting, but realize that the business, like access, is labor intensive and expensive to maintain and grow. Many struggle to offer a combination of access and hosting services to cover their monthly operating expenses.

Still others try to augment further by offering other services, realizing that developing and implementing these services is time consuming, expensive and difficult.

Many are currently looking for an exit strategy, but realize that subscriber value and the ability to sell is difficult right now.

Customer Service<

Many ISPs are faced with customer service woes as they try to provide adequate customer service. Attracting and retaining knowledgeable and skilled employees can be tough. And even more, the costs of providing adequate customer service can greatly affect profits.

Maximize Subscribers

In addition to the many obstacles ISPs face, many are unable to obtain the value of their current subscriber. Independent ISPs are often caught using antiquated or inadequate billing programs to track and manage accounts receivable. As many as 30 percent of end-users receive services for free because they slip through the billing cycle. If ISPs could actually collect on these services, their profit ratio could increase dramatically. So what's next?

Devlop an Exit Strategy

Many ISPs started their business hoping to cash out somewhere down the road. But many are finding that recent events and a slowing economy have negatively impacted subscriber value and the ability to sale. Still, it is a possibility. ISPs must focus on increasing their subscriber base, decreasing turnover and lowering costs, if they are going to succeed in liquidating their business.

The light at the end of the tunnel

What many ISPs don't realize is that there is a way to make business easier. Products and services exist in the marketplace that are capable of reducing costs and maximizing profits. Outsourcing can be an ideal solution for ISPs. While many ISPs worry that outsourcing may cause them to lose control of their subscriber base, this is simply not true. Outsourcing, simply decreases costs, and in many cases increases the quality of service offered.

Making the ISP profitable is a reality

In order to become profitable, ISPs can leverage econmies of scale by utilizing someone else's network. The benefits of doing so are enormous. ISPs can decrease their time managing equipment, and most significantly, decrease costs associated with buying, upgrading and obtaining equipment. ISPs can take advantage of skilled engineering teams, new technology, expanded coverage, and state-of-the-art equipment thus offering better quality service without incurring additional costs. Peace of mind comes in knowing that costs per subscriber are fixed, thus alleviating the financial roller coaster.

ISPs can take advantage of bundled packages that allow them to combine network usage with other products and services, including outsourced customer service. Thus, ISPs can offer their customers access to the best customer service out there, all for less than what they may currently be spending. And best of all, they can rely on the fact that the reps are industry trained, the best in the business - Customer service reps that focus only on Internet solutions.

In addition, ISPs can take advantage of business rules-based billing systems that can fit their business needs. By leveraging a comprehensive billing system in conjunction with other products and services, ISPs will be able to collect on more end-users, thus increasing their profits even more.

Once ISPs alleviate the IT, customer service and billing burdens, they can focus on marketing and increasing their subscriber base.

There is more to life than the ISP business

Help is out there. Digging a little can help ISPs realize that there is light at the end of the tunnel. The project they started years ago to gain financial freedom, can do just that for them. ISPs wishing to escape their virtual prisons can find relief in outsourced services. They will free up time, increase their subscriber base and finally realize profits.

About Henry Smith

Henry Smith co-founded IKANO in 1999, as the parent company of SISNAź*, one of the nation's original Internet Service Providers, Smith has learned a great deal about the ISP business including challenges and success factors. Under Smith's leadership, IKANO has become the market-leading provider of branded Internet Services. SISNAź is the leading Internet Service Provider in the Rocky Mountain Region, with an Internet telecommunications infrastructure that spans 16 states.

Before launching IKANO, Henry served as Vice President of Engineering and Director of Digital Courier Technologies (who purchased SISNA in 1997), an Internet software and e-commerce Company located in San Francisco, Calif. and Park City, Utah.

Smith is a recognized leader throughout the Internet industry. He was a featured speaker at Comdex to a forum of top CEOs. Smith has a BS degree in Engineering from the University of Utah and has also completed several years of graduate work and is currently working on his thesis.

Top Ten Reasons to Outsource

• Increase revenue
• Decrease operating costs
• Get off the economic roller coaster
• Collect a higher percentage of monthly subscriber fees
• Improve customer service
• Focus on marketing and growing your subscriber base
• Expand coverage without incurring additional capital, equipment and recurring telco costs
• Offer additional value-added services
• Take advantage of the state-of-the-art equipment with the heavy investment
• Take advantage of scalability, otherwise not possible