Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : America On-Line: will it survive ...? -- Ignore unavailable to you. Want to Upgrade?

To: Mick Mørmøny who wrote (10573)	7/9/1998 1:28:00 AM
From: Mick Mørmøny	Respond to of 13594

Local ISPs Rule Bigger isn't better for customer service TLC File those eulogies: Small local Internet service providers aren't a dying breed. Although numerous pundits have predicted the demise of these scrappy service providers, I'm here to tell you they're wrong. You've heard of all the big names in the ISP world: AT&T Corp., BBN Corp. (part of GTE Corp.), MCI Communications Corp., PSINet Inc. and UUNet Corp. (part of WorldCom Inc.), but for all their size and supposed corporate ferocity, not one of them has more than 3 percent share of the ISP business in commercial accounts. In fact, they're routinely beaten by the gnats--the small local ISPs. And these pint-size ISPs don't just beat the big names once in a while: They beat them to the tune of owning more than 60 percent of the ISP market among commercial customers! The only big names that come in at more than this low level of market penetration are America Online Inc. and WorldCom's CompuServe unit, but that's because they provide basic dial-up Net access to smaller businesses. AOL and CompuServe essentially disappear by the time you get to larger, 500-plus-employee accounts. What gives? Why are these small local providers proving the pundits wrong and doing so well? Simply put, providing Net access is just the first step for most small local ISPs. They also offer services and customer service that appeal to corporate and departmental IT managers. As I listened in on some of the thousands of calls we (at Ziff-Davis Market Intelligence) make every month to commercial IT staffs, I heard firsthand why small local ISPs are the providers of choice. The comments--and the empirical data--show that local ISPs take a comprehensive and cohesive approach to their accounts, whereas national ISPs bounce customers from one service administrator to another. One Web respondent at a Fortune 1000 company put it best: "I call the owner of my local ISP, and he comes running. Once he's here, he does whatever it takes to make things right." And small local ISPs have done a super job of moving beyond just providing access. Many have truly become Internet value-added resellers for their commercial accounts. More than 70 percent of small local ISPs offer site hosting, page design, e-mail and other services. And well more than half provide security services, network management and support for credit card payments. Furthermore, most of the small local ISPs focus their service activities on getting the job done, not on the up-front request for proposal (RFP) process and selling consulting contracts, as some of the big names do. Again, going to the actual surveys, one IT professional who oversees his company's Web activities said, "With my local ISP, we have an hourlong meeting, and he can give me a ballpark price and an estimate of when the job will get done. When we used a big-name ISP, it took 45 days to do the RFP dance before I could get any information." This is not to say that AT&T, MCI, UUNet and the rest are idiots or incompetent. Rather, as the Internet space moves at warp speed and the need for basic applications such as home pages, e-mail and even rudimentary commerce services heats up, small local ISPs have been more nimble than some of the big names. In addition, Internet activities at U.S. commercial accounts have exploded in terms of demand. It's not so much that the big names are constantly blowing it; rather, in many cases their plates are so full they can't respond to all the opportunities. In a way, this situation reminds me of the early days of the PC business, when the dealer channel was composed of small, service-oriented independents. And just like in the PC space, once things slow and the opportunities start to become similar, there will likely be some consolidation. But for now, small local ISPs are dominating commercial accounts in the United States. That won't end tomorrow or the next day. In fact, based on how usage patterns for Internet applications and activities are growing, the consolidation activity probably won't begin in earnest until after the millennium. Plenty of time for pundits to come up with version 2.xxx of their local ISP eulogies.