Going up market: Carriers, ISPs unveil wholesale services to help small ISPs differentiate

As Internet service providers continue to struggle in a market with razor-thin margins, many may be increasingly looking toward their larger brethren and carriers for help.

Last week's ISPCon show in San Jose turned into something of a coming out party for several big ISPs and competitive carriers as they unveiled wholesale services that small to medium-sized operators can use to differentiate themselves. For wholesalers, one of the big benefits is lower marketing and customer acquisition costs.

"Part of the beauty of the wholesale model is that our costs fall tremendously," said John Kraft, vice president of carrier and ISP services for PSINet. "It also allows our customers to be more than a plain vanilla ISP."

PSINet, which provides connectivity service to 109 ISPs, rolled out a new network-based content filtering service that allows Internet users to block objectionable material from the Web. PSIChoice uses content proxy servers to screen Web pages based on parameters that are chosen and configured by the ISP and end users. Unlike other content filtering devices on the market, the service requires no software on the individual user's machine. End users that want the service can be identified through specific user identifications.

"If we see that anyone has played with the ID at all, we just drop the packets," said Kraft.

IXC Communications, which has built its reputation as a carrier's carrier, announced that it was getting into the ISP connectivity market with a branded dial-up service. Under the planned service, ISPs will be able to use IXC's 750 points of presence (POPs) to provide nationwide dial-up access even if they only have POPs in a few locations. Later this year, the company will offer a wholesale Web hosting service, said Jim Clishem, vice president of Internet services for IXC.

"We take the simplicity approach," he said. "We're doing the tech support. We let the customer actually bundle the CD so that when the user gets it, it looks like the ISP branded it."

FirstWorld, a competitive local exchange carrier covering Southern California, said it would roll out a similar service geared specifically toward small ISPs on Nov. 1. Partnering with NaviNet, FirstWorld's GeoDial charges ISPs on a per user, per month basis. Most carriers charge per port regardless of usage.

"If a user doesn't dial in and authenticate on our server in a month, the ISP isn't charged," said James Schwartz, vice president of integrated product management for FirstWorld.

In other show news, ISPhone said its network operations center would open the first week of November. The company, which is wholesaling Internet protocol capacity from Qwest Communications, is attempting to tie together several small ISPs to offer voice services through a network of Cisco Systems routers. So far, 30 ISPs have expressed interest in the project, according to Ken Moody, vice president of ISP operations.

Star Telecommunications plans to buy 59% of PaeTec Communications, a privately held competitive local exchange carrier based in Fairport, N.Y. Star plans to offer its customers local exchange, data and Internet services.

ACSI, a wholly owned subsidiary of e.spire, won multimillion-dollar contracts to build local fiber optic network facilities for Frontier Corp. ACSI will design and build local fiber optic infrastructures in Atlanta and Washington, D.C., to connect Frontier's backbone network to local serving offices and long-distance points of presence.

Atlanta-based competitive carrier Network One has signed local phone service resale agreements with Bell Atlantic, BellSouth, Ameritech and GTE. Network One is approved for service in four Bell Atlantic regions, including Washington, D.C., and seven BellSouth states, including Georgia and Florida.

MGC Communications Inc. signed an agreement with Allied Utility Network to provide local phone service to metropolitan Atlanta through Cobb Energy Membership Corp. The agreement is part of Allied's HomeVantage program.