Beating Bells At Their Own Game
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Ever since the Telecommunications Act of 1996 opened up the telecommunications market to the competition, a horde of Internet service providers (ISPs) have set up virtual shop around the nation in the late '90s.
While the spirit of the law hasn't changed since that landmark act, neither has the reality of the law -- many providers and advocacy organization say that to this day, getting the incumbent local exchange carriers (ILECs) to open up its networks have been an uphill battle, and a losing one at that.
The reports of Baby Bell abuses, shoddy service and stonewalling tactics are legion -- a search through any Web-based media archive can lend credence to that belief.
ISPs seem to have two choices: working with telephone companies or finding a way to circumvent the Bell's network.
Michael Pastore, INT Media Research senior analyst, finds in his report, " ISP Evolution: Providing Services for the 21st Century," that in addition to the relatively slow adoption rate of broadband throughout the U.S. in the residential market, ISPs have the double whammy of working through the Bells to get high-speed users signed up.
"Supplying broadband access is central to the current and future plans of ISPs," he said. "But questions have risen about the demand for broadband among residential customers, and ISPs are limited in creating this demand."
The answer: superior value-added services and wireless Internet connectivity.
The past few years have seen a dramatic increase in the number of ISPs turning to fixed wireless services to bypass the telephone and cable companies. By setting up a wireless backbone from the ISP to the customer's home, it avoids the provisioning problems inherent with digital subscriber line (DSL) and cable Internet service (independent cable services are realistically more than a year away for the local ISP).
There are two wireless options available for ISPs to bypass the last-mile quandary -- fixed wireless (on the 2.4GHz license-free band) and satellite.
The report finds nearly 30 percent of ISPs today are planning on a fixed wireless solution for their customers, with 13 percent looking at satellite services.
According to the report, it's not enough for ISPs to continue providing run-of-the-mill services that got them to this point in time with America's increasingly tech-savvy and demanding public.
"There was a time not that long ago when an ISP offering its customers 56K dial-up access could provide a decent living for its proprietor and keep customers satisfied," Pastore said. "ISP customers, led first by businesses and now residential subscribers, have raised the bar for connectivity services. ISPs have responded to these demands by offering several means of Internet access at varying speeds and making additional services, such as Web hosting, filtering and security services available to users today."
The report shows more than half of today's ISPs have value-add options in mind to compete with the telephone companies, services considered essential and beyond those normally provided by Internet access providers.
- 60% of local ISPs plan to add firewalling in the next six months.
- 50% plan to add virtual private networking (VPN) services.
- 70% of all ISPs add less than 100 new users each month.
The second part of our series, coming out Tuesday afternoon, will detail what ISPs working within the Bell networks do to stay in business and how they've managed to work with, not against, the system.