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ISP Business Plan
[IMAGE] 5. The Competition

The competition for Internet Services in this market can be broken into three categories: On-line Services, National ISPs, and Local ISPs. Because a local ISP has so many advantages for the customer over the National Providers and On-line Services, it is the existing and future Local ISPs that have to be studied most closely. There is significant competition based on price and service. The key to obtaining significant market share is to offer the best service. A reputation for good connectivity, no busy signals, courteous staff, and breadth of service will allow us to grow steadily at profitable pricing.

On-line Services The On-line services are actually the source of most new Internet customers. CompuServe, AOL, and Prodigy are the training ground for the consumer to become familiar with computer information resources, interactive forums, and the Internet. Because of their pricing policies and inflexibility they force their customers to seek alternatives as soon as they find they are online more than about 30 hours a month. Some drawbacks to On-line services include:

  • · Hourly rates
  • · Unprofessional email addresses (1234,5678@compuserve.com)
  • · Busy signals
  • · Slow modems (14.4 Kbps)
  • · Unresponsive help desks.

National Service Providers The national service providers include PSI, Netcom, Microsoft Network, and Spry. These are true Internet Service Providers but have some of the same drawbacks as the On-line services. All three have dial-up Points Of Presence in our target market. They also have problems:

  • · Hourly rates
  • · Busy signals
  • · Slow modems
  • · Impossible to reach help desk

Local Service Providers These are the true competition for our business. Their business model is the same as ours. For one reason or another each one of them has failed to meet market demand for reliability and service. Here is a list from our competitive analysis.
(Michigan ISPs)
ISP Number of Modems Number of Customers
AANet 24 500
BBNet 60 1,200
NestNet 20 200
NuNet 60 40
Totals 180 1,940

AANET is based in Ann Arbor, Michigan. They provide local calling to Oakland County by back-hauling all calls over a T1. This means they are limited to 23 simultaneous calls. Until they make the investment in local real-estate they will not be a contender in this region.

BBNet was until recently the biggest concern. Their main Point Of Presence is located here and they have the biggest market share. After the recent acquisition of BBNet by a large NSP it has started to lose customers as the understaffed help desk does not respond, callers get lost in "voice mail hell", and busy signals become common place.

NestNet is run by a very competent Jim Polk out of the basement of his father’s house. They provide good service but they will not be able to grow due to lack of funding to hire 24 hour support staff, etc.

NuNet is the most recent entry into this market. They are an offshoot of a local cellular phone franchise. It is assumed they have adequate capital to grow and that they see long term benefits to being in this market. They plan on buying market share by being the "low cost" provider. Because they will be after the mass market they will probably have rigid constraints on what services they offer. We will be able to meet this challenge by offering free Web pages, family accounts, info-responders, etc.

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