Cheap expansion: Carriers help smaller ISPs gain ground

Limited cash flow can block smaller ISPs from grabbing more markets, resulting not only in a missed opportunity for the ISP, but also giving would-be consumers one less choice for Internet access.

A healthy, competitive market continues to give rise to an increasing number of Internet providers, all of which seem to be scrambling for customers. The smaller ISPs' monetary hurdles apparently have inspired another niche for carriers - data products and services aimed at removing some of the pressure.

While last week's ISPCON in San Jose attracted a slew of companies offering value-added services to help the ISP differentiate itself, SBC Communications subsidiary Pacific Bell wants to help ISPs extend their market reach cost-effectively so they can focus on value-adds that will help them increase business.

"[Our offering] can relieve the ISP so it can focus on growth opportunities," said Tom Bayless, sales director for business communications services at Pacific Bell.

For the carrier, the show was a logical platform on which to introduce its Virtual Point of Presence-Dial Access Service and Virtual Point of Presence-Circuit Emulation Service. The new services caught the attention of ISPs such as rural InnerCite, one of ISPs in the El Dorado Hills, Calif., area.

After establishing a market on its own, further expansion was the next step for InnerCite. To save money and refocus its energies, it decided to team up with Pacific Bell.

"We buy a line from Pacific Bell and they buy the equipment [for buildout], which lowers our cost and that of consumers," said Steven Souther, president and CEO of InnerCite. "It makes sense. We can offer the service through the LATA without adding POPs."

As for local carriers, Bayless said the VPOP suite gives them an advantage because it opens up another business facet.

The service can be an asset to the carrier and the ISP, but it is imperative that both companies get along, as their relationship does not end after an agreement is reached. "We have to trust these folks because if a customer says something is not working, they have to take care of it," Souther said.

For InnerCite, VPOP-DAS was a good option. It allows the company to reduce capital and real estate investment costs associated with modem management and maintenance so it can focus its resources on generating greater revenue from new services.

Because some ISPs may not want to relinquish all network management to a company such as Pacific Bell, or because they do not have a proprietary protocol, they may choose VPOP-CES. For those who want to manage their own networks, this provides a cost-effective way to merge all data traffic from dial-up and DSL networks onto one platform.

It also converts customers' dial-up traffic into ATM traffic and carries it across Pacific Bell's data network, handing it off to the ISP as either ATM or dial-up traffic depending on customer preference. By merging traffic across an ATM connection, Pacific Bell maintains that the ISP can manage all network traffic with one managementplatform.

Whichever the option, the ISP will receive traffic reports to keep up with activity, Bayless said.

VPOP-CES is currently available in Pacific Bell's territory, while VPOP-DAS is available throughout both Pacific Bell and Southwestern Bell territories.