BROADBAND THE ONLY SALVATION FOR ISPs NEARING EXTINCTION

The surviving ISPs must adopt broadband or perish. That message was hammered home repeatedly last week in Baltimore during the Service Networks conference, a show that is a shadow of what was once ISPCon.

Independent ISPs, which reportedly have been on the verge of extinction for a decade, must adopt commercial broadband to target “tweeners” — customers between consumers and businesses large enough to have their own support personnel, said Dan Moffat, co-founder, president and CEO of New Edge Networks and the conference's keynote speaker.

Residential dial-up service will diminish, he said, warning attendees to “stay away from the cable modem and RBOC steamroller” where lower prices for higher bandwidth services will squash dial-up's margins.

“We're not saying dial-up is going away, we're saying the margins are going to get thinner,” Moffat said.

Not surprisingly for someone whose company has based much of its fortunes on the technology, Moffat advocated the virtues of DSL. Self-anointed DSL survivors that weathered the demise of NorthPoint and Rhythms NetConnections also supported the DSL model.

“There is a demand for this kind of business solution, but we have some horror stories we have to outlive and outperform,” said Harry Taxin, president and CEO of MegaPath Networks. DSL-based ISPs, he said, rode the dotcom roller coaster and got off the ride with some guilt. “Not that we're responsible for the economy, but we didn't help a lot.”

Though the capital markets are closed to all but the largest carriers, surviving DSL-based ISPs are still seeing an increase in demand, said Keith Markley, president and chief operating officer of DSL.Net. “Our phones ring constantly now — at least as much as they did during the boom times,” he said.

Linking with the right broadband players has taken on far more importance. Taxin is using a variety of technologies, including DSL, ISDN and T-1. He's also looking at cable.

“The industry is still wide open,” said Steve Schilling, president and CEO of Netifice Communications, which is working with DSL and cable.

But that openness is more dependent than ever on broadband. “Broadband is here to stay, and ISPs are going to need to establish relationships with broadband providers,” said David Crenshaw, a general partner in TEK Ventures. “The cable guys are finally figuring out that having these multiple providers actually drives their broadband service.”

Rising demand is further proof that the Internet's foundation is going to evolve based on the steadily increasing hunger for bandwidth, said Lawrence Roberts, chairman and chief technology officer of Caspian Networks and the show's first-day keynote speaker.

“This is becoming the largest business in the world,” said Roberts, who unveiled a survey of bandwidth usage and Internet growth. Data, he said, is now consuming 80% of the bandwidth, but its revenues still lag behind voice. By the end of the decade, Internet revenue will equal voice revenue.

That, he said, will drive a demand for a new system of routing packetized information that eliminates “dumb” devices and replaces them with routers with distributed and dynamic routing.

“Dumber things are not as economic as smart,” he said. “There is still a lot of work to do on the Internet.” If last week's message is accurate, it will be done via broadband.