Perspectives - Networking: The ISPs Have It

Faced with cutthroat competition, the ISPs are splashing out on expensive kit to keep their customers. Nick Farrell takes a look at how dealers can cash in on the situation

Once the cottage industry of the cyber hippie, the ISP market is getting as cutthroat as the rest of the computer world. Users, who can change providers with a phone call, are fed up with clogged networks or a lack of services, and are voting for their favourite ISP with their feet. With technology at the forefront of providing better and faster services, the ISPs are now buying more kit and hoping to cover the investment by attracting more customers.

Chez Hamill, president of the Internet Service Provider Association, says that ISPs have become victims of their own success and have had to increase their services to cope with the massive demand of the past two years.

?The small ISPs that once dreamed of a setup with a small Cisco router are now big enough to be looking at Sun Sparcs. They are getting more serious and are confident that the capital they invest can be repaid. The second wave of people in the ISP business are a lot more professional, they are interested in things like marketing. They are in alliance with the technical people so they can provide mission critical services,? says Hamill.

?In the case of the large ISPs, it is a case of buy or die. They need to have better, bigger and faster kit with very wide bandwidth. The smaller ones will have to focus on marketing and working with larger ISPs to form more community-based products.?

Demon Internet marketing manager James Gardiner says there will always be a place for people who can provide an internet connection to a small number of people, but the real race will be among the medium- sized ISPs trying to get bigger.

While the cottage ISPs will be able to survive by offering community specific services, the medium-sized ISP will find a growing number of users demanding better services and expecting to pay only a nominal connection charge.

But whatever equipment the ISPs want, they feel they are being let down by dealers who do not really have a feel for their industry. Easynet marketing manager Neil Ellul says: ?I hardly get approached by hardware dealers at all. The software dealers are in here all the time, but for some reason hardware dealers don?t seem to think that we would be interested in the actual nuts and bolts equipment or infrastructure.?

Uunet Pipex channel group manager Martin Temple believes dealers need to start trying to better understand the needs of the ISP. ?They have to realise that we are fast becoming much more than access providers and are wanting to form business relationships with dealers to provide products.? Top of the ISPs? shopping list are bandwidth and comms links. Ellul says ISPs are stuck because they have to keep buying lines and adding more bandwidth to cope with the increasing demand of users.

?ISPs have to find a balance and expand at the right time. If you expand too fast you can?t make much money because you haven?t got the customers to justify the technology. But there is a point where, if you don?t provide enough for your users, they will leave,? he says.

Uunet is one example of a company that was ahead in bandwidth before it had the users to justify it. Demon is one company that lost customers because it did not have the bandwidth in place.

?We need to cut the cost of bandwidth, and resellers are likely to be the ones that can help us do it,? says Ellul.

Ellul feels MFS is the best at providing bandwidth for the ISPs because it has a US infrastructure. BT is not really that useful because only a small amount of its massive bandwidth is used for internet traffic. ?Mercury is not there yet but it is getting there and could be the one to watch,? he says.

Uunet?s recent merger with MFS has given the company a telco licence and much-needed cash for investment in comms and bandwidth investment. Recently it announced that it had bought a 10Gb line across the Atlantic at a cost of #500 million.

?It takes a lot of #10 a month subscriptions to be able to do that ... we could only do it because of the investment from the American side of the business,? says Temple.

While few ISPs can provide a total internet ring around the world, Uunet goes both ways, giving it global resilience. Temple believes this sort of investment by the bigger players could spell the end of medium-sized ISPs which will not be able afford to provide such a global service. ?There will always be a place for those who can connect small communities to the Net and provide a lot of single user dial-ups. But people will want the global links to the likes of Asia and the medium sized companies are not going to be able to provide them.?

While investing in a new 45Mb link to the US, on a more local level Demon Internet has joined those signing deals with Energis and Colt. It hopes to provide resilience by effectively setting up two networks, according to Gardiner. ?ISPs are realising the danger of putting all their eggs into one telco. If there is a major fault on a telco your network could be down for days.?

According to Cix director for sales and marketing Jennifer Perry, many ISPs have been signing deals to get national coverage using 0845 numbers. Cix has done this through Colt and Energis and one reseller partner.

?Cix, although concentrating on its conferencing service, has had to provide an internet service too and this has been causing a drain on bandwidth,? Perry says. While ISPs have been upgrading their hardware, there has generally been only one beneficiary ? Cisco, which dominates the ISP market. For example, in the sale of routers, Cisco supplies more than 80 per cent of the market.

Compuserve network services European product manager Steen Thygesen says: ?It is because they are able to position their product as an end to end solution ... and they are so big there is a lot of software out there for them.?

Compuserve has had a relationship with Cisco since it bought out Stratacom which was its preferred supplier for switches. Lately, Compuserve has been buying Cisco 5200 Access Servers and adding new routers to its core to improve its virtual internet service.

Temple feels that over the next year Uunet will upgrade its Cisco 7000 routers to add more ports. ?Uunet tends to deal with Cisco resellers; we believe that the channel is the way to go and do business.?

Thygesen foresees further deals in hardware being needed in 12 months when internet/ intranet tunnelling standards are agreed. Tunnelling will let ISPs provide a secure and private internet within their own networks or over the Web.

There are two tunnelling standards in use ? L2F from Cisco and PPTP from Microsoft. A compromise solution, L2TP, which will be the official standard, is in the pipeline.

?We are starting to provide the L2F standard on our network. Providing a secure and private internet on an ISP?s network will be the first stage before tunnelling into the internet is offered,? Thygesen says. ?ISPs will have to approach dealers again for more kit to do the job.?

NT is another area which ISPs are either buying into or looking at buying into, according to Hamill, whose employer Dialnet has invested heavily in NT. ?Everyone is talking about the impact of NT on the ISPs. There is a lot of evidence that they are moving to NT-based systems which a year ago people would have poured scorn on.?

Thygesen believes this is because NT servers are being used by a lot of companies to give remote access and the software provided the ISPs with the technology they wanted. ?It is a very good platform that offers compression of data for remote users and with the Windows 95 dialler it is very easy to set up. NT also comes with a built-in Web server; a lot of ISPs are having to provide their own Web pages and this saves them having to buy another one. A lot of the companies that ISPs are providing their services to are using NT as part of their corporate operation. If both parties are on NT it helps resolve compatibility and technical support issues,? he says.

Connection technology is another area where reluctant ISPs will be forced to buy kit because their customers say they must. Technology that will enable modem access at 56.6Kbps will soon be shipping. Although none of the ISPs seem to believe it will make a diffe rence to the majority of their customers, they feel they will have to provide it as a marketing exercise. There are three main companies who provide solutions in this area ? US Robotics (USR), Ascend and Shiva. ISPs have invested heavily in using one or the other. USR is so far the only one to offer a 56.6Kbps upgrade.

This means those ISPs wanting to go to 56.6Kbps will have to wait for Shiva or Ascend to provide an upgrade or scrap their current kit and buy USR. Uunet is pleased it had USR modems in the first place because its move to 56.6Kbps will be as easy as upgrading a flash Rom on each one.

But Gardiner does not believe there is any need for Demon, which uses Ascend, to change because he is not convinced 56.6Kbps will work. ?Most users would not notice any difference between these connections and 28.8Kbps. At those speeds you are looking at quality of the telephone line affecting the speed. If you want speeds faster than 28.8Kbps you should be looking at ISDN.?

Although reluctant to do so, Perry says Cix users will decide that the company will have to provide a 56.6Kbps modem service, even if technically it is not worthwhile. Cix already has USR technology and she can understand why Demon would want to wait and see before dumping its Ascend boxes. Ellul says Easynet will probably expand its use of Ascend boxes, perhaps waiting for a 56.6Kbps upgrade.

ISPs need to have their services in place in order to pull in the punters, but the initial outlay required for this sort of an investment can present many with a make or break scenario. It is more than a little chicken and egg ? wait until your user base reaches critical mass before investing or splash out on service enhancing technology in the hope that people will find you irresistible.

When you find yourself caught between a rock and a hard place, a little help and guidance can go a long way. So, it may be that there is scope for resellers to step in and play devil?s advocate with the ISPs. Ellul is unlikely to be the only ISP representative who feels the channel is being backward in coming forward.