Small Internet provider may be plenty
By Anick Jesdanun
Associated Press
NEW YORK — George Prusak has shopped around for online access, trying large Internet service providers such as America Online, EarthLink and AT&T. When he saw an ad for Unions-America ISP, the president of the Colorado Postal Workers Union couldn't resist trying just one more.
"There's absolutely no difference just because it's union-hosted or EarthLink or AT&T," Prusak found. "I prefer to support labor unions, and that's what this does."
The Unions-America ISP has fewer than 1,000 customers, a smidgen compared with the millions using AOL or EarthLink.
But collectively, smaller ISPs — at least 5,000 in the United States — are holding their own, and in some cases grabbing veteran users from larger providers.
Getting linked to the Internet is much like buying a car. A new Mercedes and a used Hyundai cruise the same roads. The difference is in the add-ons, the Net equivalent of power steering, CD player or roadside assistance.
Some ISPs target certain regions or special-interest groups. A few are devoted to certain viewpoints. Many are mom-and-pop operations with a few thousand customers. They are generally cheaper and promise hometown relationships — an ISP in Barbourville, Ky., even makes house calls for tech support.
AOL remains the largest service provider by far, with 26 million U.S. subscribers and a 31 percent consumer market share, according to International Data Corp. MSN follows at 10 percent. Other large ISPs include EarthLink, Prodigy and United Online, which operates as NetZero and Juno.
Size matters. AOL and MSN can make deals for exclusive content and features such as parental-control software. EarthLink can devote resources to controlling spam and blocking pop-up ads. Larger ISPs include redundancies in case of local network failures.
Tom Andrus, an EarthLink vice president, acknowledges the company has had complaints — which it has addressed — about placing customers on hold too long. But smaller ISPs have troubles, too, he said. "It's more about being the right ISP than the size," he said.
Daryl Schoolar, a senior analyst at In-Stat/MDR, said the giants' market shares have been slipping — but the gains are with regional telecoms offering high-speed DSL service, rather than the mom-and-pop operations.
Yet, with relatively low overhead costs, smaller ISPs can find a niche, said IDC's Steven Harris.
An ISP has to lease lines to the Internet, and if it's a dial-up service it needs a bank of modems. ISPs typically bundle access with e-mail accounts and Web hosting. They may contract out parts of their service, such as tech support, or all of it to a "virtual ISP" that handles the back-end infrastructure.
Some tap into existing businesses, such as the billing system for newspaper delivery. Colorado's Jefferson County Public Schools sells employees subsidized dial-up access to the school network.
Smaller ISPs have struggled. Some were bought by rivals or larger companies such as EarthLink.
But the biggest challenge will come when more residential users demand high-speed access, which few small ISPs can provide.
David Robertson, president of Stic.net in San Antonio, said ISPs like his will have to focus more on value-added offerings such as spam filtering and training for newcomers.
And not all ISPs are interested in serving every type of user.
Hawai'i-based FlexNet won't offer tech support, as it seeks only the most experienced users at $10 per month.
