January 01, 1999

Fiction: Third ISP from the left

The grass is always greener on the other side, or so the saying goes. To most of the 550 odd prospective ISP's who bought application forms few months back and hundreds of others who have started queuing up outside the DOT office everyday, money would certainly be the most important driving force.

The invention of WWW, which gave birth to commercial Internet, is no less than a second Industrial revolution. Internet not only brings people closer together but also changes the way people, companies, and government across the world operate today. Only the dumbest of dumb would walk away from such an interesting business proposition without thinking twice. In early 1993 when hundreds of companies sprung up across America, they had a dream, which was not very different to that of what we have today. Their expectation of growth of business was expected to be almost the same as that of the growth of Internet itself. And looking at this rather impressive growth of 100% every year, this business proposition was certainly not one, which could be lost. However, a year or two later when America had about 5000 ISP's around the country, none were running in profits.

An ISP business unlike what people would tell you is not about Money, and unlike other industries it would never be about money. From the time of its inception, from the days of ARPANET, Internet was a means of getting things done, and the universities which provided this important service, were proud of the service they offered. They never made money on it, but they never invested in it themselves either. The point I am getting to is a simple fact that looking at Internet Service Provider as a Internet Money Provider would be one of the biggest mistakes a person could ever make, and that though you can make money indirectly, it has to be well planned.

Five years after Internet went commercial in a big way in America, only a tenth of the total ISP's are making profit today. Most of the rest have either closed their shops or have been bought over by bigger competitors. And the ones, which still exist, are the ones who avoided making mistakes, which the rest of the 90% made in the beginning.

Rules of the game.

1. ISP is not a golden goose. Even if you think it is, don't go for the early kill. Be patient.
2. Investing small need not translate to big earnings.
3. Neither does investing big.
4. Quality should be given preference. Value addition is the only component of service, which you can charge on.
5. Don't sell unless you can support your customer
6. Investment never stops
7. Operational expenditure could be very high. But avoiding them is not the answer to success instead count for it in Business plan. Technical support is the most crucial, but others are also as important.

Like all industries, people investing money expect early returns on investments. Looking at the history of ISP's in America, one should not expect anything before three or four years. Recovering total investment may even take more time. However the key info to note here is the fact that Investment is an ongoing process which is essential for the basic survival of ISPs.

Access to Internet is a service, which is considered to be the basic minimum an ISP can offer. This is so true that a basic TCP/IP login is now provided as a free service by many of the ISPs. What one should look at making money from is the extra value added services one can offer. Surprisingly many of the mom-and-pop corner shops have continually survived the assault of the big ISPs over the years because of a simple reason of being closer to the customer. Its these small ISPs who know the best what customer needs as value added services. Giants like AOL and VSNL are more like dinosaurs that are strong but slow to react to local requirements.

Both VSNL in India and AOL in America connect lots of people to the Internet. But when it came to user projections none could anticipate the exponential growth in demand, which hit them suddenly. VSNL as of today is trying hard to not become over subscribed. They have a month long waiting periods just to get a simple login account. And once you get it you are expected to wait for connections, which can be as bad at 10 retries before a successful hit. Well planned ISPs today, usually, keep buffers ready to service these unexpected customers at any time of year. As they say, ``its more difficult to retain a customer than acquiring one.''

India has been gifted by a very large English speaking population and a highly democratic government to support it. Internet in India could never be more open than as it is today and hopefully other related infrastructure would continue opening up. No matter what I say ISPs are not going to wait to jump in and by the end of next year, like in cable industry, I hope to see a couple of ISPs at my local marketplace.

While we wait for ISPs to get ready, I can only imagine of ISPs setting up shops at my local marketplace. ``...I'll choose the third shop from the left''.

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