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The Virtue of Being Virtual

by Mark Sweeting

Virtual ISPs don't have to worry about tech support, running their own servers or even know what a modem is - so why aren't more smaller ISPs VISPs?

If you ask someone on the street to name an ISP, who do they say?. I tried this and got the answer "". When I asked some of my friends, "Freenetname" was one reply, "" another, and "Global Internet" one more. The interesting thing here is that all of these are Virtual ISPs. and are provided for by NTL and Freenetname and Global Internet are VISPs of Concentric Networks.

Plus if you ring the technical support line, you would actually speak to an NTL technical support person, who may have just been talking to a Which? Online customer, or a customer. This means that a VISP doesn't even need to know how to plug a modem into a computer!

Do nothing, be a VISP
Quite simply, a VISP is an ISP that does not own, run or manage the hardware on which it is based. They never need to ask themselves, "Are our systems fully and regularly backed-up?", "Do we have redundancy?" or even, "What the heck is redundancy anyway?". With all this outsourcing of work, you could be forgiven for asking "What do VISPs actually do then?". Basically the answer is two things: Marketing and Selling.

It is not hard to see how the VISP approach has worked for huge companies with very large customer bases. The question is, "Would it work for the smaller ISPs?"

Firstly, we need to distinguish between a typical large and small ISP. There isn't the space to go into much discussion here, but for argument's sake, let's assume that the big VISPs provide either dialup access with very basic hosting/email services for large numbers of the population, or they provide expensive business hosting deals/co-located servers and connectivity.

In contrast, the smaller ISPs provide very little dialup access. The number of free coffee mats/CD-ROMs that the huge VISPs pour through letter boxes every day has made sure of that. The rest of the services can roughly be brokenup into three categories: mass hosting (cheap but not very flexible), hosting with all the bells and whistles (usually at good rates), and design/development services. Some will offer dedicated boxes or co-location, but these are usually reseller deals or at the end of a not-very-fast leased line.

With the price wars and the slowing down of the domain registration frenzy of the last year and a half, the class of smaller ISPs that have been generating much of their income from cheap domain sales will be facing much lower levels of income than before. In these cases, the necessity to cut overheads is obvious. This is where the idea of being a VISP comes into play.

The outsourcing solution
Outsourcing work is a very popular move in modern businesses. If a computer firm can outsource all its web site design, maintenance, hosting to an ISP, why can't an ISP outsource its hardware provisions?

The cost of a fully redundant back-end system (with all the bells, whistles you could ever hope for) to provide a service for 2,000 customers is actually not a great deal less than it would cost to provide for 10,000 or more customers.

I made a few calls to some smaller ISPs and asked them what services they provide. They all gave similar answers: a handful of POP3 boxes, domain registration/hosting/forwarding/redirection, CGI, MS FrontPage extensions, a `control panel' and so on.

So what is it that differentiates these businesses? It certainly isn't their back-end provisions. It's a question of customer service. The way a member of staff answers the telephone, how helpful they are, and how knowledgeable they are about your particulat questions is very important. Of course no-one will ever ring you if you don't market yourself well, and this is the other important factor.

So is going down the VISP road a good move for today's small ISP? In the end it boils down to whether or not your customers get a better deal. If you can cut your back-end costs, spend more on your customer-facing staff, your branding and your marketing then the answer is almost definitely yes.

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