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ISP Business Plan
[IMAGE] 3. The Internet

By now everyone has become acquainted with the vast potential of the Internet to expand communications, provide entertainment, and increase commerce. Every major print publication has articles on the Internet in every issue. Ads for most Fortune 500 companies include their URL (web address) as often as their 800 number. This is the fastest growing market/industry in the world. While the number of Internet users is doubling every six months the number of Web pages is doubling every 53 days!

There are several models of the Internet that are important to an ISP. The topological model deals with the Internet infrastructure. The distribution model is how an ISP fits into the market. The commerce model is how the ISP’s customers look at the Internet.

Internet Topology

The Internet consists of high speed circuits connecting routers that that transmit data in the form of IP packets. The circuits are maintained by large telco’s (MCI, Sprint, Worldcomm) the routers are owned by ISP’s. The national ISP’s such as MCI, UUNet, AGIS, EUNet, and SprintNet lease circuits from the telco’s to connect their routers in their various Points Of presence (POPs). Regional and local ISP’s purchase connections from the national ISP’s. The national ISP’s have connections to the Network Access Points (NAPs) where they exchange routes and traffic. Thus the Internet Backbone is really several backbones owned by the National ISP’s that come together at the various NAP’s.

Internet Distribution

The Internet business model is based on distribution of a commodity. That commodity is bandwidth. The market consists of several National Service Providers. They are AGIS, MCI, Sprint, UUNet, PSI, Netcom, and ANS. Each of these companies operate networks of high speed lines across the United States. Several of them also extend to the rest of the world. The NSPs "meet" at the Network Access Points (NAPs) where they exchange traffic. The backbones are currently 45 Mbps DS3 circuits. These are being upgraded to 155 Mbps ATM circuits during 1996.

Most Internet Service Providers get their initial T1 (1.54 Mbps) Internet "feed" from these NSPs. They then resell connections at 28.8 Kbd to dial-up customers.

Internet Commerce

A dial up customer sees the Internet as a resource for getting information, communicating, conducting commerce, and doing business. Generally the value to them of an Internet connection is hundreds of times greater than the monthly fee of $20. And of course the entertainment value of the Internet plays a predominant role in its growth.

The customer at the end of the Internet distribution channel is totally unaware of the topology and workings of the Internet. Their only concern is getting connected when they want to and getting reliable throughput and service.

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