All Internet is local: US Online helps small ISPs look, act, buy big

Times are tough for small and regional ISPs and they're only going to get tougher. Some believe that the growth of potential ISP superpowers, such as America Online and Excite@Home only heightens the threat to the smallest among the 6000 ISPs in the nation, making it impossible for them to thrive, or even survive.

US Online is an affiliation of ISPs trying to buck those trends. It was founded in 1998 on the belief that small businesses spend 70% of their budgets locally, therefore local ISPs should have an advantage in enabling those transactions. US Online has been signing ISPs, assembling a national network and offering its 117 member providers features such as technical support, roaming capabilities, DSL and a uniform local portal.

Most recently, US Online announced a $10 million deal to get its members discounts on DSL equipment from Elastic Networks. "One of the biggest problems [our members] are fighting now is telcos that don't want to give them access to broadband," said Steve Klock, CEO of US Online. "We saw this as the best way to walk in and provide a superior solution with 4 Mb/s symmetrical DSL. We'll enable them to become data [competitive local exchange carriers]."

That's not something the members of US Online can do easily alone. Scott Daniels, operations manager for NWInternet, a 4000-member ISP in rural eastern Washington, said GTE won't guarantee his company what services will be supported on any dry copper circuit it buys. "There may be load coils on it or other provisioning that might be a problem for DSL," he said. "Being part of a larger group helps."

"We'd have a real problem," said Glenn Hughes, president of EXP Internet Services, a 3000-member ISP serving Beaumont and Port Arthur, Texas. "The incumbents are playing hard ball, using predatory pricing, and you need every advantage you can get if you're going to stay in business."

What sets US Online apart from previous efforts to organize small ISPs is signing only one member per territory - defined as the first three digits in a postal zip code, Klock said. "No one wants to share information with their direct competitors," he said. ISPs join the network and pay a monthly fee in return for free roaming and buying discounts. A higher level of membership gets higher discounts and more services in return for a percentage of monthly revenues.

The roaming feature is particularly attractive to NWInternet. "We have a lot of retirees who go to Arizona for the winter, and a lot of them used to cancel their accounts and start them back up in the spring," Daniels said. "Now they can keep their accounts and log in locally, have local tech support and local customer service."

This month US Online expects to roll out a local portal it developed in acquiring Interspan, a portal service that grew out of a small Utah ISP and became so popular locally that it tripled the parent company's membership in 18 months. The new service will allow ISP members to offer their customers features such as instant messaging, news, stocks and sports content, a local events calendar and local advertising.

"We'll aggregate all that into one service that the ISP can co-brand," said Brandon Sheppherd, product manager with US Online. "It's a product that would take their whole monthly budget to create and maintain by themselves, and we'll do it for them."

Eventually, US Online will add elements to the portal that lets local small businesses display their products on personalized Web pages.

The portal is one more piece in US Online's very local strategy for survival. "It recognizes that the ISP's local presence is its greatest asset," Klock said. "These ISPs have relationships with the small businesses and consumers in their regions. They're considered the local experts on the Internet. We want them to start thinking of us as a strategic partner that's helping them reposition as a provider of these kinds of services to small businesses in their area."