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On Starting a Successful ISP? 216

Tigris666 asks: "I would like some handy hints from all /.'ers on what is needed in order to start up an ISP. I'm asking you guys in hope that someone out there has started one before, and i think that's a fair assumption. There are obvious things like mail/web servers, dial-in modems/systems, tech-support employees. But what i'm looking for is an idea on costs (we're talking Australia here), hardware required, and basically an idea on how hard it might be? Things like setting up the internet link, organising the phone lines to be put in, how many servers are needed, and the big thing! Is it all worth it? Does it pay off in the long run?" With larger fish finally jumping into the waters of Internet connectivity, is there still room for smaller companies? I would think that any new ISP would not be able to survive by solely providing dial-up service, and would need to look into the possibility of providing DSL or cable connectivity. However, providing broadband connectivity is a significant and expensive venture, made even more difficult considering the current economic conditions. What suggestions do you have for anyone who thinks themselves up to it?

"Basically the idea came up because the area I am from is in the country. There is only 1 service provider out there, and they are really bad with disconenctions, among other things, and everyone i know absolutely hates them. I think starting an ISP would be a good oppurtunity. I have recently moved to the city to get a real job, however I much prefer living in the country, so this will certainly be a big step."

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On Starting a ISP Successful ISP?

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  • by Anonymous Coward
    in the US, the principle problem of starting an ISP now is that users are moving toward broadband connections. These connections are have higher infrastructure costs and the market is being squeezed out to the phone companies and cable companies.

    Since you said you were in Austrialia with only one ISP provider, I assume that you are where the US was roughly 5 years ago. This assumes that most people do NOT have cable service and the phone companies aren't likely to have DSL for at least 3 years.

    If these statements are true, then becoming an ISP may be a viable option. The key cost is that of the point-of-presence. Check around with Sprint/MCI and check the costs of a T1 or T3 line with access to the internet. Costs for a T1 (back when I checked it out) were roughly $1000 per month. (Phone lines are much cheaper - $20-$30 per month). I strongly recommend basing the location of your servers on the location your T1.

    As for the back end servers, there are commerical grade routers available that connects directly from T1 to modem.

  • by Anonymous Coward
    Big companies like UUNet and PSINet will let you resell their phone/ISDN/(where available) DSL ports. This is an excellent business proposition since they manage all the gear; outsourcing that really is a good idea. You can also outsource technical support, although it is said that it's best to create a "corporate culture" and integrate your own tech support reps into it, since an outsourced rep will never care as much about your customers as someone whose paycheck comes directly from them.

    You also need to invest in good facilities. A raised-floor data center is a must, and leave lots of room for growth. Many data-wrangling companies (like ISPs) wind up having to move to different facilities just because there isn't enough room for their gear.

    Since you are going to be paying top dollar for bandwidth, it is probably a good idea to get into the web hosting business. Also, look into providing colocation services; as long as you don't let it get out of hand, it's practically free money.

  • by Anonymous Coward
    In Australia , AOL , MSN etc have a VERY low profile & takeup rate, as we are treated like some kind of backwater.

    The biggest ISP is Telstra BigPond [http] (for home customers) with the rest being smallish ISP's. There are a good dozen or so 'National' providers, but historically their tech support and quality of delivery blow.

    Where I live (Tasmania) there are stacks of small ISP's, who all seem to be good for a year or so, then they suck, as they don't seem to expand much on their initial infrastructure.

    For god's sake, if you DO start an ISP... Upgrade your bandwidth BEFORE people start to walk away!

  • by Anonymous Coward
    Talking with a few of our customers that are Down Under, The technology is nowhere near the USA but it's not 3rd world. Noone knows cost unless they buy and sell in Australia, so take the few listings that had equip and compile your own chart. You kinda left ISP vague so I'm assuming you'll be wanting to provide all services that an ISP -can- do. So you're wanting to provide...
    • Dialup access
    • some static higher speed
    • Web hosting
    • mail/news/application/e-commerce
    am I correct or miss anything? So basically hardware wide you need a fat enough pipe to a major ISP either T1 or frame relay. I would suggest looking for a major provider that will start you out at 128k nilling increments based on your usage, nothing sucks more than paying for a T1 and only using half of it. Now lines in, youll need a bank of 56k modems, i liked USRobotics but there are much cheaper now if you can score good quality ones, then get something like a digiboard or Specialix bod or if you ARE incorporating some higher speed lines go for a Ascend box that can handle it, or course these are just some of the brands i'm familiar with, you can choose what fits your budget.

    then you're going to need a very basic router... mmm Cisco 2501 can be had cheaply and will do the job, but again just design a network that fits your budget. If you don't know how to design a network, time to hire someone that does, or maybe think out of this whole ISP thing right now.

    a few simple (insert distro) linux servers or BSDi running on some low end P2 or P3 machines will do you good. get one with a BIG harddrive for news and get one for mail and a webserver and get one for misc things like the e-commerce or any misc small databases that you may support. Oh and dont forget to 10 or 20gig tape backup system that backs up your data incrementally every night and does full ones on mondaynight. I know that seems obvious but noone mentioned it yet and well, I can attest to at leat 15% of my effort was spent in restoring backups.

    you won't make squat on dial-up access, once competition evolves youll be forced to go unlimited time and sure enough 50% of your banks will be filled with kids who hang on 24/7 to their connection. The big(sic) margin is in webspace and charging for a webspace's bandwidth usage. Make sure you purchase a very good usage meter(software package) so you can tell when and who is using all your bandwidth..because for sure your upstream ISP is watching you and charging you for your usage.

    hope that helps and good luck, I started an ISP in Texas from the ground up in 94', built it up all by myself for a year and then left because the profit was pathetic and the stress was too high. You have to love it and give it your all because if not it will fail, every startup ISP I've known had zealots who founded it, and those are still going strong even today, others who were run by people halfheartedly who were expecting big profits have all gone under by now. Tank

  • by Anonymous Coward
    It's interesting that you have no grasp of English grammar but know how to spell "bankruptcy". Sounds like you have experience in that area.
  • by emil ( 695 ) on Monday May 07, 2001 @08:58AM (#240369)

    I published this a few years ago for Unixworld. You will want to use the PAM (RH5) configuration.

    A single Pentium 150 handled 32 lines with no problem. []
  • Forget the technical aspects. You can deal with them. I know of ISPs that have made NT work (years ago, 4.0 with no service packs) good enough to be considered the most reliable ISP in town.

    Marketing is where it is all at. If people don't know you are there, they won't sign up.

    Switching ISPs isn't easy, if the other one is good enough they will stay. I can handle a few discounnects, much easier then I can handle all the people who know my email address. So you are mostly selling to those who don't have a isp. Better service will help them decide to take you. Don't count on switching anyone unless they piss their customers off.

    If you are a cut rate ISP, you don't need redundant servers. Just install openBSD on a pc, with apache, sendmail, and a radius server and you are ready to go for the first month. (Virtual ISPs are good in the US but not for where you are)

    In some respects it is easier to sell a over priced ISP with servce and reliabilty, but you need redunant servers and the ability to keep things up. When I called UUnet about a T1 line they told me that as part of their price (twice the other quotes!) they qould gaurentiee the line stays up, even if it is someone else's fault they take the hit (don't charge, and fix it).

    But you need to start with marketing. Who are your customers, where do they live, how much do they make, what kind of computer do they have... Figgure that out, and then figgure what they can afford to pay for. Then figgure out how you will tell them about your service.

    Worry more about which newspaper adds you take out. You should spend more time doing interviews for the local paper(s), radio, and TV. If they don't know you are there they will not come. For every dollar of technical you spend do two marketing. For every minute of technical work do two marketing.

    don't plan on making money for the first year. That means you live off of your day job, wife, or savings.

    160 cusomters is a good number. Out of that you need to pay for two t1s (one for data, one for dial up), and make payments on your servers and the modem bank. Don't forget rent, utilities, and your wages. Labor is less then then you would think. Use that number to figgure out what you need to charge to achive the level of support you want. (Remember quality costs money)

    Once you are close to a 10:1 modem ratio cut back on marketing, but make sure you maintain it. (or expand your number of lines, depending on how many more customers you can reasonably get.

  • Australia is an english speaking democracy-land full of crazy capitalists. I'm sure the two markets are somewhat comparable.

  • by defile ( 1059 ) on Monday May 07, 2001 @02:43PM (#240372) Homepage Journal

    Starting an ISP in the USA nowadays is most likely a mistake. Here's why:

    • The dialup market is almost effectively gone. Most ISPs now use their dialups to either add value to their existing services or because they service a tiny area with extremely dedicated customers. We service the NYC area and get only 1 or 2 dialup customers a month now (and lose 5 or 6), when they used to come in at about 10/day and we couldn't even meet the demand.

    • Dialups are practically sold as a commodity by big corporations who just want to sweep it up. You'll not only be competing with AOL, but AT&T, MSN, IBM, Earthlink, but also a bunch of ISPs that will give it away for free (like Altavista, of all people).

    • If you want to compete using other technologies, such as DSL, you'll have to deal with the phone company. Your main business will be selling the same technology that the phone company sells, but at a higher rate [because the telco prices it that way, since you're a competitor]. And when the telco downs your service for whatever reason, customers call you, not them. Your core business will center around escalating trouble tickets on behalf of your clients for DSL. There's a real reason as to why Northpoint, Red, and Covad have folded or are in deep shit. If you want to make money at this, you'd better have a lot that you plan to put down up front and won't mind throwing away based on the telco's whim. You will also compete directly with cable, which will almost always be less error-prone

    • The market is getting -more- saturated, not less. This is contrary to how most people thought it would end up (3 or 4 big ISPs dominating the continental US)

    • You will also deal with commodity web hosting providers who will host sites for practically nothing. You cannot effectively compete with them unless you either offer fantastic tech support or plan to provide custom development.

    My advice for people starting new ISPs is that you shouldn't. It's a terribly bad idea. We're a small, established, conservatively run ISP (in terms of how we spend) and it's very hard to survive. We will survive, and we're finally out of the red, but it took us 5 years to get here, and the market back when we started is nowhere near as hostile as it is now.

    If you're still interested: Forget dialups unless you really expect to target a strong niche market that AOL and the rest miss. I'd concentrate more on custom development for web sites (where you also host their sites), or finding some possibly untapped technology (like satellite internet, which could work very well in some areas).

    If you live in a particularly metropolitan area, you could also concentrate on dropping T1's to huge office buildings and running ethernet to each client from there. That is a much better deal than the cable/DSL that they're probably stuck with. There's more sales involved than anything, though, with this approach. (Word of mouth doesn't seem to work as well for this since corporations don't generally get along as great friends within office buildings, least in my experience)

    Good luck.

  • This all really depends on how big you want to be. Of course one starts small, and all that. I personally don't know the market in Australia, but I gather there are 1 or 2 major telcos/ISPs and some smaller ones. The big problem these days (in the US/Canada anyways) is that you really have to be pretty big to start an ISP. The start up costs are huge. People expect quite a bit these days. Think bandwidth (huge cost), hardware (you do want some damn reliable servers), people (tech support, customer service, admins, some management). Dealing with telcos, carriers and vendors is a nightmare, you need to advertise and market yourself. You need to properly configure and run mail/pop/imap servers, radius servers, terminal/dial-in servers, routers, you need to have a good architecture in place (even a small ISP will have many machines). You need to arrange for a news feed of some sort (many users will expect this) which will burn through your bandwidth in no time. You will need a professional web presence, and some tools for your clients to manage their accounts (or be prepared to hire lots of customer service people to handle simple things like password changes and mailbox purges). You need to have a proper account management system, and a hopefully automated account creation and maintenance system. And we're not even into the business and money side yet. Without a question you need to have good business sense, unless you know others to do this you will have to do the initial hiring. Then there is the question of is it worth it? From an experience point of view, if you don't have too much to lose it's definitely worth starting and running your own business. But these days with all the big ISPs tying up the dialup market and fighting over each others' user base there isn't much money to be made on dialup. The margins are very slim. Think about all your costs, estimate your client base (be optimistic), multiply those by $20-35/month and figure out how long it'll take you to make a profit. The big money is to be made providing 'business solutions': web hosting, ecommerce stuffs, connectivity. And you can't do those on any significant scale unless you're already big and well known. Sort of a catch-22. In summary, it's really really tough, (should have started 5-6 years ago, hmm?) but like many people here will tell you, there _is_ money in providing good, friendly and reliable service, people will still pay for this, despite the $10/month deals you see every so often. Probably won't make you a millionaire (even and AUD one), but you can make a living on it eventually if things to right.
  • You need to ask yourself these questions:

    Who are my customers going to be?
    How many of them will there be?
    How much will they be paying per Month/Year?
    What service will I have to provide them?
    How much will it cost to do so?
    How long till all this starts paying for itself?
    How many customers will do I need for that to happen. How many do I have to bring in every Month?

    What is my funding going to be until things start paying for themselves? If it costs you $1.05 to bring in $1.00 in revinue you will not last long.

    What could go wrong?
    What did I forget.

    If you look at the web site of the US SBA, (Small Buisness Administration) there is a lot of stuff on founding a small company. If you are not in the USA much of it will still apply and you probably have similar things localy.

    You need to plan for all of this.
  • Yeah...don't you need like 100,000 users at start and in two years have to be at 250,000 users?

    I remember something like this where the numbers were just huge.
  • I am the Network Administrator for an ISP in Mount Vernon Illinois ( We currently provide dialup in the local calling area, ISDN, T1/Leased Lines, and wireless broadband. What I've seen from the three years that I've worked here is that yes, the services and QoS that you offer is important, but equally, and certainly no less, important is customer service. People still are not highly educated on using computers, and when they have a problem, 90% of the time they are going to blame you, the ISP, even when the problem is NOTHING to do with you. It takes a high level of person to person skill to overcome this obstacle. You can have all the routers, firewalls, servers, RAS units, etc, that you want, but if you don't have technical support people that can teach someone how to double-click over the phone, and not piss them off trying, you're going to go down pretty quickly. That's my main word of advice. Oh yeah, and get your blood pressure medicine ready, the phone company will give you hypertension if you don't already have it!
  • Hmm. I'm curious as to what trouble you had. Our company was started on $30,000 capital, and has broken even or been in the black ever since, now being a $1 Million company. This is in a very small population area, too...
  • First I'd suggest researching the market you're going into. /. is great for geek-stuff but what you need are Aussie-dollar numbers, and locally relevant ones at that. (Many /.'ers are unaware there are countries outside the US borders with their own internal markets, pricing, laws, etc.)

    First find out more about your potential competition. Call them up and ask for a technology description. Use local newsgroups & find some talky techies, get more detail. Possibly pose as a customer with detailed needs, get more information (be careful here - this could be a legal problem that would come back & bite you.) Now find a couple more similar ISPs around and discover what they use, how they charge, etc. Try & determine how healthy they are.

    Details you'll be wanting are the technical specs but also how many customers do they have, what do they charge residential customers, what do they charge commercial customers, how many of each type of customer do they have, exactly what services do they offer, etc.

    Now look at their upstream suppliers. Who are these companies using for upstream feeds? What is it costing them? What services are available? Try & determine if there are non-compete clauses in place.

    Next familiarize yourself with the local applicable telecom laws. What rules govern the ISPs? What rules govern the phone companies you'll be working with?

    Finally what are the conditions of the local infrastructure & economy? Are the phone-lines in such poor shape that disconnects are inevitable? Are there enough customers to support a robust ISP or is so-so service all that makes sense economically?

    As many /.'ers will tell you in most parts of the world the PTT's are successfully killing off their competition. Presumably you'll be competing with your own local phone service, offering an alternative to their ISP (assuming they have one.) Do you think you'll be able to work with them? Have others been able to work with them?

    With all of the groundwork in place consider if you can take on the job, or at least catalyze it / make a profit somehow.

    Are you competent to start or run an ISP? Do you have access to folks who would be interested in going in with you, helping flesh out the plans into a working set of papers and if you were to somehow set up shop could / would they take positions in it? Can you develop & pitch a business plan? What would make investors likely to give you money, help you get started?

    Finally once you've got all of the numbers in place will it be possible to make a profit or would you be better off spending your time on something else? Will you be able to put together the capitol, the technology, the support, the services, the advertising, the billing, the relationships in order to make this fly? Do you have what all of this takes?

    Frankly I think the days of the Mom 'n pop ISP are over, muscled out by bigger companies with more capital, advantages of scale & connections.

    Where I do see smaller ISP's making a comeback is in boutique-ISPs where specialized services are offered & overhead is kept low by expecting the customers to be technically proficient & help themselves. These geek-only services are often low-key & word-of-mouth deals run as a sideline by some enterprising local geeks. Things they offer are lots of access to some good webservers, gamer-services, IRC servers, newsfeeds, etc. These seem to make a reasonable profit but are self-limiting, probably won't support anyone directly.

    Aside from that the big boys seem able to starve or crush their competition with often the issue coming down to which one hates less - the cable company or the phone company? In rural areas it comes down to the phone company or the satellite company but either way it's two giants.

  • I agree. Wireless is the only way to go.
    Dial-up has incredibly small margins--you'll end up making pennies per customer.

    DSL is the game of the Telcos.. you'll end up re-selling someone else's service.

    Cable is even worse.. It's resell or lease connections.. both are next to impossible in the US, don't know about AU.

    Wireless is the only way to have complete control over your margins, and still make a profit. The initial equipment costs are high, but they are for the other options too. Though, in a rural area, you may possibly be able to find some cheap tower space (farms with CB towers or radio station towers), or even build your own tower. With the right equipment you can reach pretty far, and with a good network topology you can break your access points geographically and hop to many neighborhoods.

  • I worked at an ISP for a year, and although they went under recently, I can tell you the do's and don'ts that I learned from my company. Firstly, the cheapest and least demanding way to get customers and hence income is definitely not dialup or dsl. The latest equipment is too expensive, and each user only provides a small amount of revenue - less money than your tech support time is worth. After awhile, in fact, we let our dialup users continue to use the system, and we stopped billing them. So when they'd call we'd tell them that support was for paying customers only. If they tried to pay us, we'd tell them that we no longer offered that service (even though they were currently using it) :). Hey, it's nicer than shutting them off outright. So how did we make our money? Simple. Reselling frame relay circuits. This of course cuts out the home user, who has no need for such a big link, but that's better anyways. It's much easier to deal with a dozen customers who give you $500/mo than a hundred that give you $5. We'd buy frame relay circuits in bulk from GTE or Pacbell and resell them to midsize offices as a 'value-added reseller'. Where this value comes in, I'm not sure - I guess it meant that when the circuit went down they'd call us and we'd call GTE/Pacbell for them. But hey, people paid us. :)
  • With larger fish finally jumping into the waters of Internet connectivity, is there still room for smaller companies? I would think that any new ISP would not be able to survive by solely providing dial-up service, and would need to look into the possibility of providing DSL or cable connectivity. However, providing broadband connectivity is a significant and expensive venture, made even more difficult considering the current economic conditions.

    Three friends and I started an ISP about a year and a half ago. We have made some money with dialup, but by far have made more money with webhosting and programming services. With DSL there is _NO_ way to make money unless you charge about the same price as a frac T1. The telco's have you over a barrel and are not willing to resell the service for a reasonable price. My suggetion to you, don't do things that can't pay for themselves. You can't stay in business if you do not break even.
  • I was involved with an ISP startup a few months ago. The owner has some very interesting business strategies and offered interesting technologies. It was going fine.


    He had to shut it down. Why? Because, although he was making money, the user base wasn't growing at a fast enough rate to the point he would be able to pay us all a _real_ salary. The compnay could support itself, but it could not support the people involved in it.

    The key here, I think, it Capital. If you really want to be sucessful, you need to have enough stored capital, not to run the company, but to pay your employees, including yourself. You need to have enough cash at your disposal too keep the human side running while the business' user base grows to the point where it can sustain itself.
  • Good advice, except:

    couple of 20-gig hard drives, throw Linux with Apache, Sendmail (or Qmail), Radius

    Only use Linux if you're comfortable securing it - if not you'll be owned in no time flat. If you want to run UNIX servers your best bet is OpenBSD []

  • Not only has this already been asked, but Cliff posted the story [].

    Nothing important has changed since that story was posted. Use the search feature at the bottom of the page.
  • I'm a SysAdmin at a small Melbourne based ISP.

    My best advice would be think again and if you still want to do it then think again...

    Do a LOT of research and create a solid business plan. By the time you do that you'll probably see why I'm saying think again.

    If you still want to do things and want some specifics on servers, etc feel free to email me (just remove the NOSPAM.)
  • Step 1:

    Start 8 years ago.

    It's virtually impossible to make an ISP work these days because of the overabundance of cheap access. There's no way a start-up ISP can compete with $20/all-you-can-eat. It's just not feasible to compete with that level of economies of scale.

    Starting a Mom-and-Pop ISP is going to be nearly impossible if any of the nationwide ISPs have a Point of presence anywhere near your chosen market. Once you've established your market, you can be sure that the Big leaguers are going to notice you and soon offer service in your area, so you've got to drop those prices down below $20 a month ASAP.

    In my humble opinion, it's not worth your time to start your own. There are opportunities to franchise with a larger ISP (I think), which might be a more realistic option.
  • This sounds exactly like what a company I worked for in 95-96 was doing in Kansas... except the 56k lines were 128k ISDN. (Still have an Ascend Pipe 50 in my basement)

    They even got creative and hopped latas with cleverly placed pops to avoid long distance charges. With 128k ISDN unmetered from Southwestern Bell @ $105/month, it was cheap way to provide access to little towns.

    This was also my first introduction to i386 *nix - bandregg, ksteph, and kleo the cat had Linux, SCO, and some variant of BSD running mail, news, and web, while an NT box did FTP and another https.

    (wonder if you're reading guys... sure you were assholes, it was cool anyway.)
  • I did my time at an ISP, and your suggestions would never fly.

    shell-only accounts
    This is a security risk and legal nightmare. While 90% of subscribers are legitimate UNIX/LINUX users, you've always got that 10% who think they can use you as a platform to launch their cracks. Since ISP's can be sued if they are repeatedly used as a cracking platform, it's not worth the effort or the legal fees (FYI, if I can prove that cracks are repeatedly coming from your ISP, I can legally establish negligence on your part for allowing it to happen. It sucks, but it's worked before.)

    static IPs
    If he's running dialup, then ABSOLUTELY NOT. Static IP's encourage users to keep their connections alive all the time. If you've got a dialup with a 3:1 or 4:1 customer:line ratio, this will quickly swamp your service and cause busy signals. Busy signals are an ISP's worst enemy.

    metered toll-free access
    ISP's only prifit $1-$2 a month per customer as it is. If you charge the connection costs back to the ISP, you quickly end up with negative cashflow followed by bankruptcy.

    "free" email accounts
    For customers? Sure. Everyone else can bugger off.

    maybe email virus scanning at the server
    Again, liability issues. If you claim to filter email viruses and then someone gets one anyway, you will quickly find yourself on the pointy end of a lawsuit. If you CLAIM to filter viruses, you'd damned well better be able to stop them ALL. Otherwise, don't even bother.

    game servers, irc servers, news servers
    Cost permitting, sure. But with the tight margins modern ISP's have to deal with and the need to watch bandwidth usage to keep costs down, it's unlikely that a small rural ISP should be wasting precious capital on something that only a small minority of users will be interested in.
  • This hasn't been a viable question since 1993 people, get real! you missed it. moron.
  • I see a lot people saying "its not going to happen", "quit now before you loose your money", "the ISP market is all wrapped up".... these are all probably true if you are in the US.... the Australian market appears to be wide open from what I see.

    Umm, yeah right.

    There's this little problem. It's called bandwidth. In Australia it costs lots money. Think of a high number, then triple it. I'm serious.

    Then along with that, this poster is thinking about a regional area. Even worse. That number you thought of before? Double it. As other people have said, you needed to do this eight years ago. You might get something out of it in a regional area, but given the setup and ongoing bandwidth costs, you'd have to have a lot of money to burn before you started to break even.

  • Don't do it! I've seen many individuals fall prey to the evil ISP syndrome. ITS A WASTE OF TIME! You've got to have MEGA-CASH. IT SUCKS LEAVE IT! START A COMMUNE OR SOMETHING!
  • As some have mentioned, an ISP is a business, not a tech job. You have to figure out who your market is, what they will pay, before you can even figure out if it's feasible. Knowing nothing about Australia... I can't say.

    It sounds to me like what you are asking for is a full business case study for your area, plus equipment recommendations.... something that you should be paying for.

    Yes, shameless plug for my former employer (I only left because it was an offer I couldn't refuse).

    Both LOS and non LOS products for exactly this kind of thing. Large, open, flat areas are ideal for LOS type service. One of the product lines is geared specifically towards launching urban wireless ISP's... including (I think) cost modeling the whole thing, showing how long it'll take to recoup your cost, etc. Full centralized network & customer management & billing software included.
    If you want to be really simple, you only have to build one good mail server on top of all this, and you are set to rock.
    I believe we (erm.. they) even have an office Down Under (company used to be called ADE?)

    Don't let the website fool you; it's a bit marketroid.. but the products are there.

    Yes, shameless plug for my former employer (I only left because I received an offer I couldn't refuse).

    One of the product lines is geared specifically towards launching urban wireless ISP's, including (I think) cost modeling the whole thing, showing how long it'll take to recoup your cost, etc. Full centralized network & customer management & billing software included. They basically sell you a business model, equipment, and technology/training to make it fly.

    If you want to be really simple, you only have to build one good mail server on top of all this, and you are set to rock.

    I believe we (erm.. they) even have an office Down Under (company used to be called ADE?)

    Don't let the website fool you; it's a bit marketroid.. but the products are there. There's more to it that what the website shows.
  • I was the sysadmin for a small ISP a few years ago. There were a lot of things I enjoyed about it, but there were plenty of headaches, too. I don't know about the cost differences between the US and Australia, but I'm sure a lot of the things I learned still hold true. First of all, you'll never make money on just dial-up services.

    You *must* have some value-added services if you want a chance at getting any real profits. Even if you have to outsource it. Some good VAS: virtual hosting of domains/web/email, web design, office networking, colocation services.

    Do everything you can to keep your systems secure. Sign up for all the major security-related mailing lists (BugTraq, NTBugTraq, and Vuln-Dev would be a good start), and apply patches and work-arounds as soon as possible. Don't think that just because you're out in the boonies that the crackers won't find you -- they will.

    When possible, go above-and-beyond for customers. You can win some good customer loyalty that will help you hang on to them when finally drops a POP in your area with prices that undercut your business. This is easier when you're just getting started, but be careful not to let people leverage your goodwill into free services. Driving out to a new customer's house to configure Dial-Up Networking for your service for free is okay (once), but helping them figure out how to do a table of contents in Microsoft Word is consulting work.

    There is no such thing as "unlimited" connect time or disk space. If you offer such a thing, somebody will eventually take you at your word and abuse the spirit of it. Set reasonable limits, and wherever possible, automagically enforce them. Configure your dial-up server to automatically terminate connections after so much idle time or continuous connect time. Configure user and group limits for hard disk space. Track and throttle bandwidth on web pages. But don't be too restrictive. Make it "feel" unlimited for most of your users. Only the power users will use more than 100 hours/month of dial-up time (actually, the majority of users will probably use significantly less than 50hrs/mo). But offer reasonable alternative plans to cater to the power users. If you have several technically savvy customers, try to leverage them. Set up local tech support forums and offer discounts for customers who can help moderate them.

    Plan for growth. If you aren't willing to commit the resources (financial or otherwise) needed to grow your business, you probably shouldn't start in the first place. Keep your eye out for new markets. When dealing with dial-up in rural areas, you want to find places where a single POP is a local call for many surrounding communities. For example, in my area it would be easy to make the mistake of installing a pop in Dothan, which is the largest local city, with a population of about 50K. But it would be smarter to put a POP in the tiny little town of Daleville. Daleville is a local call from Dothan, Enterprise, Ozark, Fort Rucker, and several other smaller communities which would have to call long distance to Dothan.

    Good luck!

    Ernest MacDougal Campbell III / NIC Handle: EMC3
  • by matth ( 22742 ) on Monday May 07, 2001 @09:49AM (#240396) Homepage
    A friend of mine and I have started an ISP for very few start-up costs. We accomplished this by renting lines from UU.NET and then we provide the mail/radius, etc servers. They are in a data center. So it's been very inexpensive for us, and the dial-up line quality seems to be very good frmo UU.NET

    Swift-Networks - Nation Wide ISP! []

  • I work for a small company who, two years ago, had a lot of extra cash and were expanding their business. One of those expansions was in the ISP area.

    They saw money to be made, but had a guy who didn't have the knowledge or experience start it. That was their first mistake, they should have gone with me from the beginning, but I didn't take over until 5 months later after they fired the previous guy because nothing ever worked right.

    Poor decision after poor decision was made with this guy in charge. First of all, the purchase of a $15k PIX firewall, in spite of my many arguements against it. Simply no need. Start small. Another horrid purchase was the purchase of 2 $40,000 servers to handle everything, running NT4. 4 or 5 $1k servers running ANY OS would have been MORE than plenty, and a much better solution than 2 mega-servers. This was all done due to lack of experience and research.

    Anyway - Their idea was to cater towards the businesses, for web hosting and ISDN dial-up. They didn't want the large user base of cheap home-user dial-ups. And they didn't want the volume of basic $20/month websites. They believed they could charge $50/month, and offer the same service as $20/month services. Why? Because they rented space at a high-tech computer room. Problem was, no one really cared, and few were willing to put out the extra money. I believe this whole business idea to be a mistake, volume is priority #1 in this area.

    Another mistake was using Windows NT. Sure I think an ISP should have 1 or 2 Windows machines running Microsoft technologies, such as ASP and MSSQL, for those who request that. But basic services such as POP, IMAP, SMTP, DNS, RADIUS, and well anything possible really, should be run on a *nix environment. I'm a FreeBSD [] advocate myself, but Linux would probably be a good solutions as well.

    Anyway, nothing really deep here, just a few basic things I've gathered over the years. One more thing I will say though, I have NEVER regretted our decision to go Cisco exclusively. There hasn't been anything I've needed our routers/switches to do that I haven't been able to do with our Cisco products. They certinally cost, but in my opinion, you certinally get what you pay for.
  • I've tried to find some independent local providers here in Atlanta and failed miserably to turn up anything worthwhile.

    Having said this, if you become successful, please don't sell your business to the first corporation who comes along and offers to buy you out.

    Grow your business at a reasonable pace.
    Don't keep changing the "focus" of your business or your "target audience".

    It terrifies me that I don't have much of a choice in who services me anymore.

    Do I want a fast connection? Yes. Ooooooh yippie, you mean I can choose from TWO providers?! Wow. Do I want a static IP? Great, that limits me to.... one.

    Above all else, try to make your customers happy. If you're being completely swamped with complaints, you're doing something wrong.

    If a customer has to wait on hold for 3 hours to get something fixed, you're doing something wrong.

    Don't become to egocentric. If you do succeed, remember that it's your customers who put you there, try to treat them with respect.

    I long for the days when customer service was customer SERVICE, not "let's give them the runaround until they hang up because they don't have a choice anyway"
  • []

    Lariat is the Laramie Internet Access and Telecommunications group. It's an ISP co-op in Laramie, Wyoming, run by users and for users.

    They have some information on their site that you might find useful.

  • >> couple of 20-gig hard drives, throw Linux with Apache, Sendmail (or Qmail), Radius
    > Only use Linux if you're comfortable securing it - if not you'll be owned in no time flat. If you want to run UNIX servers your best bet is OpenBSD

    Good point. For a Linux distro, Debian seems to be nice and lightweight for servers, but you really need to keep up with updates on ANY O/S, *BSD included since you might be running, e.g. BIND. Subscribe to BugTraq, CERT, and whatever else you can find and hope you can install the fixes before then. There are also some hardened Linuxes out there, with StackGuard protection of all programs and so forth.

    Okay, OpenBSD "out of the box" is more secure than RedHat and some other Linux distros out of the box. Happy? :-)
  • by RavenDarkholme ( 27245 ) on Monday May 07, 2001 @08:57AM (#240401)
    Not knowing anything about Australia and telco costs and so forth, I can't really comment about that. (So why are you posting??)

    In the U.S., though, I've worked for an ISP who goes into a lot of little towns where there is no (or little) ISP service. They usually start out with 12 phone lines, which in US dollars is about $300 a month, and a frame-relay 56K connection back to the main ISP which is another couple hundred dollars a month, an Ascend Max 4000 or Portmaster III which you can get on eBay for not too much.

    Webserver/mail server/DNS server? Heck, get a couple of lower end Celerons with, say, 128 megs of ram, a couple of 20-gig hard drives, throw Linux with Apache, Sendmail (or Qmail), Radius of some sort (I rather like FreeRadius) and BIND on them, and Ka-boom: instant servers.

    Generally, what they do is say to the town: something like, you guarantee us X number of users, and we will bring Internet service to this town. Many times, the people will sign up (and pay!) for service before the ISP even gets out there, thus making it more or less a sure thing for the ISP (and for the users, since if they don't get enough people, the ISP gives the money back).

    The big ISP's pretty much ignore smaller communities, so there is still a very large untapped market (at least in the US) for Internet service to small towns or rural areas. You can actually get quite a lot of users online before you have to get more phone lines and higher bandwidth, as well.

    So, to sum up: minimum needed to be an ISP in a smaller town:
    • Internet connection, at least 56K Frame relay, or higher.
    • At least 12 phone lines.
    • Dialup server (e.g. Ascend Max 4000/Portmaster III, or linux box with multi-line modem cards)
    • Web/DNS/Mail/Radius authentication server Celeron 400, 128 meg Ram, 20 GB drive to start out. You can make these separate servers, but I've seen people run up to 500 virtual apache domains and about 10,000 email boxes on the same machine.
    • Ability to remain calm under all customer calls.
    That's my 2 cents. :-)
  • Particularly in Australia, you surely want to read "So you wanna be an Internet Service Provider (ISP)" []. Those not in Australia will also find it very informative.

    Then open up a spreadsheet and figure out the financials yourself.

  • Having co-created the first local ISP in a 'secondary city' back in 1994, I have some perspective on this. Also some perspective in having branched out to many smaller cities.

    Having a single, local, crappy ISP is absolutely no reason to get into the ISP business. It is a headache and a half, and it will consume your life. As mentioned in the various posts, the technical end isn't really all that bad. It is the business/customer/industry/profit side of it.

    If you are ABSOLUTELY CONVINCED you want your own dedicated connection and you want spread your cost, then you might want to go the somewhat more profitable route, which is web consulting / web hosting, with dialup access to support your customers. There is some money there.

    Dialup? You've got to be on crack. You're overwhelmed by all sorts of new users who are low profit margin accounts and require lots of support.
  • I think that a lot of people are missing the point and have never beedn in the situation that he is describing

    For most of my life I lived in a rural town. To call ANYWHERE outside of that town was long distance. There are still alot of towns like this. In this situation for internet access you pay both your provider and HUGE long distance bills.

    I would have had access much sooner had there been something like he is describing.

    A lot of the people that post here are like me and spoiled by broadband. Well... That's not available everywhere.

  • actually, 10mb would be milli-bit.. even worse.
  • You're misinformed. Cistron Telecom is now a 100% competitor to the KPN monopolists and do have access to the last mile. Cistron has it's own fiber network, own SS7 switches and own DSLAMs and IP network. In fact Cistron even does wholesale to other parties, just like KPN does with mxstream.

    And mainstreet didn't have the first DSL connection in Amsterdam. People were doing that in 1993.
  • That, and they've got a free pork chop dubber on the first Tuesday of every month

    Mmmmmmm, pork chop dubber.

    Just like Mom used to buy.

  • by Flounder ( 42112 ) on Monday May 07, 2001 @08:46AM (#240408)
    There is an ISP in Hawaii that provides very inexpensive dial-up service, with a catch. No tech support. Period. They send you a sheet with your dial-up settings. And that's it. For experienced users only.

    Tech support for newbies is, by far, the biggest pain in the a** for an ISP. Eliminate them, the job of running an ISP becomes almost enjoyable.

  • And tomorrow's Ask Slashdot: How to start a successful chain of gourmet coffee restaurants!

    Gee, I should be submitting my homework questions to /. as well; after all, the TA isn't around 24/7 like you people are. Besides, compared to some of the stuff posted on here, my homework is very important.
  • I hate to reply to my own post, but someone modded it as Flamebait, and I have to respond to that accusation.

    There is a load of technical, financial, and industry-related information available about a wide number of topics. One of the very important steps to be taken in beginning any business project is to DO YOUR RESEARCH! And it's one of the talents of businesspeople to be able to take an abstract idea and fill in all the details.

    The fact that this story was posted on Slashdot does a grave disservice to a lot of people involved:

    * The Slashdot community sees an Ask Slashdot where a relatively vague and unnecessary question is asked... never mind a question posed arrogantly enough to assume we should tell him how to start an ISP. I'm not saying that the author of the question meant to be flamebait himself, but perhaps they are inadvertently being lazy and helpless. Some Ask Slashdot questions are actually quite interesting, yet get posted on the back page and recieve 4 or 5 comments. Why this happens, yet this one gets posted on the main page, I don't know.

    * The person asking the question himself is doing himself a grave disservice by asking such a broad question on here without actually going through the steps that it would take to make a successful business plan. He's enlisting us as his consultants... while some of us don't mind being armchair consultants, it's like asking the people who call into sports radio shows to do the Super Bowl coverage. We don't know shit because we don't do research, and even if we did research on the business plan he needs, we'd never be able to tell him everything in one posting. He should go out and do his own market and business research so that he is BEST able to make a decision on his ISP idea.

    * The future customers of this ISP are potentially going to be buying a service from a person who asked how to run his business on Slashdot. I already feel sorry for them.

    I admit, I'm being a bit drastic, overdramatic, and exaggerating here... but the moral of the story is the same. The best helpful advice we can give this guy is to do his own research. Ask Slashdot is helpful when the guy has a very specific technical question, and even then it's a bit questionable that this is the proper forum to ask those kind of questions (it's alright, I guess, but not perfect). But for such a general and broad question, this guy has got to find the answer for himself.

    My sarcasm doesn't quite help the situation, but I thought I'd use it to point out how thoroughly ludicrous it was for this question to make it to the front page. Then again, Slashdot isn't my site, so they can run it however they want...
  • 64k Frame relay in Aus costs somewhere in the area of US$1500 a month. We get to pay $.19/mb for almost all traffic and other wonderful things.
    A 128 isdn link is about the only real choice and is currently the cheapest outside of ADSL areas.

    Something like a T3 in the metro area... in Aus its over US$30,000 a month. In the US, $2000/mo
  • Telstra's high costs come from the fact that they don't understand modern phone systems and are clueless with rollouts of new stuff so they have to do it lots of times till they get it right.

    They installed a E1 line for our RAS and installed about $20,000 worth of kit to give us one E1 circut. If they had a clue they could have done it for much less.
  • My boyfriend chose this question for a project for one of his college classes. His report goes into a lot of details you probably already know or don't need, and doesn't go as far in-depth as it should if you were actually using it as a guide to starting an ISP, but it should be a good starting point.

    How to Build an ISP []


  • by jguthrie ( 57467 ) on Monday May 07, 2001 @10:25AM (#240414)
    Indeed, and very much so.

    With all due respect to that person of questionable intelligence who posted that rant about asking Slashdot about this as opposed to doing "research", well, I am the "pop" half of a "mom-and-pop" ISP in Houston, so I can probably give some sort of useful advice. In fact, in my opinion, and I've been doing this for most of the last decade, this sort of question asked in this venue is likely to produce more useful information than going to some library and trying to find a book that describes how to run an ISP. I really pity someone who tries to figure out how to start an ISP by reading back issues of "Boardwatch".

    The first thing that I recommend to people who want to start their own ISP is professional psychiatric help. (In fact, I have the names of several very good psychiatrists and even a psychologist or two in and around Houston, TX, US.) If that doesn't convince them that it's more fun to go broke on a trip to Vegas than to accomplish the same task by starting an Internet business, then I can get down to brass tacks.

    So, the advice (some of it contradictory) observations, and opinions in no particular order:

    • The first thing you need to know about the ISP business is that it is not primarily a "technology" business. What I mean by that is that there is essentially no technical risk. What I mean by that is that you can start an ISP with equipment and software purchased off-the-shelf. That fact is why the margins are so low in the ISP business, and why it's so difficult to stay in business.
    • I don't know what it costs in Australia, but it takes most people somewhere between 50,000 USD and 100,000 USD to start an ISP around here. The more technical expertise you have, the less you'll need to spend, but expect to spend at least as much on advertising as you do on ongoing service.
    • Unfortunately, people who have money to invest typically want to invest vastly more than that in hopes of getting vastly more return. Around here, this means that you aren't likely to be able to get any venture capital unless you can figure out how to write a business plan that calls for spending maybe 20,000,000 USD per year and breaks even in 48 months. (Lately, I've been toying with the idea of putting together such a plan, getting an investor's money, then continuing to operate on the cheap. I could then break even in 48 hours.)
    • If you do go for VC funding, try to talk only to people with money to invest. (Most of the people I've managed to talk to over the years have nothing but some fantasy about brokering a deal with some VC person for a share of the money. This works about as well as jet-propelled pigs.)
    • Customer retention is the key to long-term success.
    • The biggest barrier to customer retention is persistent connection difficulties. Most of the connection problems your customers will have will be due to the telephone company. However, your customers will be mad at you about it and demand that you fix it despite the fact that you can do nothing to help or hinder the process.
    • If you can't balance a checkbook, hire someone who can and then watch them to make sure they don't have sticky fingers.
    • If you can't set up a router, RADIUS server, and access equipment, hire someone who can and pay them a salary. Make sure their bonuses are related to uptime rather than "face" time. ("I don't care if the sysadmin's not here as long as the network is running," should be your motto.)
    • Everyone at the ISP should resign themselves to the fact that, at a startup ISP, everybody does sales and everybody does tech support.
    • Put together service packages and every time someone wants you to bid on a special project, either make it out of those service packages (after the fashion of a "Chinese menu") or don't bid. Putting together bids is a major time sink if you let it become one.
    • Try to not lose money on anything you sell.
    • Billing systems suck. Some of them suck in different ways and some of them suck expensively, but they all suck.
    • Talk to a lawyer and an accountant about the form that the business should take. Limit your liability as much as you can. You won't be able to get out of all of it, because some of the creditors will insist on personal guarantees of payment, but get out of as much as you can.
    • Explore and develop ancillary sources of revenue. I know an ISP here in Texas that does for-pay computer training three or four times a year.
    • Learn how to work the telephone system to get what you want. I don't know what that means in context of an Australian ISP, because it's different from working the SBC system, but you'll need to do it.
    • Use access concentrators and digital phone lines wherever possible. I've used Ascend (now Lucent) Max equipment and they work. Others have used Cisco equipment with similar results.
    • It may be possible to find someone who will lease you access to their modem banks. If you can do that, it might be worth your while. However, it adds an additional layer for a customer's problem report to go through, so it may not be worth the hassle.
    • Keep backups of all customer data.
    • If a vendor neglects to bill you, put the money you would be paying them into an interest-bearing account and leave it there until they notice that you haven't paid. Just because you didn't get the bill doesn't mean that you don't have to pay the bill.
    • Try to make yourself superfluous as quickly as possible. Essential people don't get vacations.
    • The most necessary tech support training isn't technical. The most important skill a telephone tech support person has is the ability to control a call. The user should be responding to you, not the other way around.

    I'm sure there's more, but that's enough for now.

  • Virtual ISP.

    Why a vISP?:

    No hardware to buy

    THOUSANDS of national access numbers

    You can make a tidy profit in rural areas by simply running a newspaper ad.

    How:In the area I just moved to, there is very little DSL/Cable. The only local ISP charges $24.95 per month. I have just signed with a vISP tp provide service here, and I am being charged $8.00 per account. I can charge a paltry $15.00 per month, make a decent profit, undercut the other ISP, and offer the user the SAME phone number the local guy uses, as well as a 10mb website, 2 email addresses and free tech support
    Amount of work by me?

    Run a 16th page ad in the local paper.
    Setup a website with a signup form.
    Create a set of FAQs, mainly based off the thousands of available ISP websites and my personal experience in Tech Support.

    DialUp USA [] - My provider
    Google vISP Search Results []
    Google-vISP- UK Results []
    CNET ISP Pricing Chart []-You can still offer lower rates than any of these!

    Bottom Line: 500 users x 7.00 profit = $3500 a month. Think about what you could do with a few ads and a few websites in different areas.
  • One More Link:

    vISP's in AU - Google []

  • Not all. You just have to look for them.

    I use a "mom and pop" for my dialup and I love it. Very personal support, competative rates, decent speeds.
  • I did just that. They weren't sure how "moron cunt" made you look more intelligent, but I assured them it did.

    2 million last year in the black.

    Not bad for mom and pop.

  • It'd be hard to find someone to sell you IP address blocks nowadays, (I know class A's are close to impossible) so that will be a big factor thats for sure.

    Well I would say for the mail and DNS servers you wouldn't need anything fancy since they're not processing scientific stuff or crack rc5 or so. So for mail servers even a couple of pIII's would be good.

    Routing equipment... Having tinkered with only BayNetworks, Cisco, and Juniper, I would say stick with Juniper Networks (possible an M160) for large BGP networking (OSPF is a pain), for internal you could use like a BayNetworks Centillion. Cisco is overrated to me. Or if you really want to cut corners then get a Sun Ultra10 and slap on Zebra [] (but thats rather ghetto)

    If your going to be doing VoIP stuff, PBX's are rather expensive, but I would look into the Merlin's from Lucent which was a fairly good experience for an older company I worked at, and it was the cheapest. However timeframes to get PBX's involved out here suck so if your local telco is in the same market as a vendor your looking at, prepare for a wait.

    I don't know the prices of everything entirely (since my co is partnered with many we see discount prices on all this crap) but it can go into low-mid 6 figure digits.

  • It'd be hard to find someone to sell you IP address blocks nowadays, (I know class A's are close to impossible) so that will be a big factor thats for sure.

    Well I would say for the mail and DNS servers you wouldn't need anything fancy since they're not processing scientific stuff or crack rc5 or so. So for mail servers even a couple of pIII's would be good.

    Routing equipment... Having tinkered with only BayNetworks, Cisco, and Juniper, I would say stick with Juniper Networks (possible an M160) for large BGP networking (OSPF is a pain), for internal you could use like a BayNetworks Centillion. Cisco is overrated to me. Or if you really want to cut corners then get a Sun Ultra10 and slap on Zebra [] (but thats rather ghetto)

    If your going to be doing VoIP stuff, PBX's are rather expensive, but I would look into the Merlin's from Lucent which was a fairly good experience for an older company I worked at, and it was the cheapest. However timeframes to get PBX's involved out here suck so if your local telco is in the same market as a vendor your looking at, prepare for a wait.

    I don't know the prices of everything entirely (since my co is partnered with many we see discount prices on all this crap) but it can go into low-mid 6 figure digits.

    As for the negativity with everyone stating its a losing venture, you fail to see that not all countries have the same availability as we do so it may be a winning venture there.

  • I've done a paper on e-startup businesses, although I know nothing about the Australian ISP market.

    To be honest, you've got a really tricky business proposition here. One big problem you're going to have is how to differentiate your ISP over all the others, while maintaining a cost competitive profile.

    Just starting out, you've got a substantial scale problem, in that AOL, or whoever serves such a purpose in Australia has you beat on infrastructure, period. Their help desk/bandwidth/server structure will be bigger than yours, and more extensible. Note that I'll use AOL as a proxy for "the large Aussie ISP" from here on out.

    Similarly, I suspect there's nothing you can do that AOL can't emulate, imitate, or outright steal. Even worse, your lawyers are going to pale in comparison to the amount of work AOL's lawyers can throw at them, so even if you catch them, it's possible that AOL will just keep it in court forever while you spend money and (more importantly) personal bandwidth on the lawsuits.

    To be blunt, I can see why one might want to do this from a technological standpoint, but that's completely different from attacking it as a business.

    A couple of ideas:

    1) Do a target market survey. Whom, exactly, do you want to serve? What are the implications of that market? My guess is that you can't compete with the AOL in getting newbies to sign up, but maybe there's a anonymity thing you can pursue among established internet users, which changes the demands upon your infrastructure completely.

    2) Look for whitespace in the big ISP's offerings. An example would be examining closely what the big guy doesn't do, and attempting to fill that niche. An example would be web hosting, static IPs, etc. I have this problem with the cable ISP we use right now, in that I can't put my IP address in DNS.

    Some other poster had a neat idea about small town internet access. What about extending that to nursing homes, community centers, etc.? You can go in, have control over the hardware, and maybe teach a class once a week to add value to the users.

    3) Keep your business model flexible. There was an interview with Bill Hewlett about how, in the early days of HP, they did all sorts of stuff with the laser technology they had expertise with. They did a home security thing, a bowling lane foul indicator, and tons of other junk. No longer term strategy, just stuff to pay the bills. In that case, they had a hammer, and tried numerous nails to see if any of them would become absurdly profitable. In the meantime, their nascent company stayed solvent, which is nontrivial.

    4) Get business people involved early. What is the problem that you are trying to solve for your users, and can you make money doing so? I suspect that doing a large scale ISP is untenable, considering the competition, so how do you get a niche? How do you keep the customers you sign up?

    To summarize, know the people you want to serve, the pain you want to solve for them, and get cash flow before worrying about profit.

    Other than that, it's just a matter of execution.

    Good luck.
  • by PacketMaster ( 65250 ) on Monday May 07, 2001 @09:20AM (#240422) Homepage
    I've done extensive contracting work for "local" ISPs and I can tell you that they are in no way on their way out. Most people out there are happy with dial-up and aren't interested in the prohibitative prices of broadband. I recently completed some contracting work for an ISP in Western Pennsylvania and they went from 0 users to 1500+ users in about 3 months. There are four major keys to having a successful ISP:

    1) You have to be financially committed to grow. When your dial-in lines are full during peak times consistently you need to add more. Nothing will cost you users faster than an ISP that rings busy for 20 minutes before a user can connect. A good rule of thumb is to have enough lines to support 25%-30% of your userbase being connected at any one time. Keep good logs of connect times and if you need more lines, buy them!

    2) Provide good service. People will stick with the ISP that provides good service to user's problems, even if it's slightly more than the ISP down the road. Get a good ISP management tool that makes handling your radius/dual-up authentication, e-mail and other services easy and hire a couple of minimum wage people with half a brain to field "1st Level" calls -- high school students would be perfect in this area. That'll take care of 90% of your problems with users who most likely can't type their password or fiddled with their settings. Turnover in these jobs is high, so make sure you have a dummy-proof system that makes training a new hire easy. There are many freeware FAQ/Knowledge Base applications out there to automate this. The one application you DO NOT want to use is ISP Power no matter what their salesman says.

    3) Have a solid person or persons behind the technology side of things. Either do it yourself if you have the knowledge, hire someone knowledgable or contract out the work (what I do part-time). Corporate IT is a lot different than ISP IT. Hire someone who knows routers, Radius, etc.. They need to be articulate becuase you'll have an uphill fight with the local teleco for both your frame connections and your Dial-In BRIs. Remeber that local Telecos push their own ISP service and you will not get good support from them if you're an ISP. You need to have someone prepared for a long drawn-out battle who can provide sound answers and be able to monitor and gather data on bandwidth and performance with which to bombard the teleco's tech support. The first words out of their mouth will be "Do you have your router configured properly" and will hammer this at you until you prove conclusively that it's not your router. You need to pick a platform and stay committed to it. Pick an e-mail server that is EASY to configure and maintain. MDaemon for NT/2000 and Qmail for Linux/Unix/BSD are good choices. Pick a hardware vendor you can have a good relationship with. 3Com is an excellent choice for ISP type hardware. Very few ISPs needs the power of Cisco equipment.

    4) Take security seriously. Your 31337 Skriptors love to find ISPs with little thought to security or else security that has gone lax. Enforce a password policy, keep good logs and have monitoring systems up and running. Have a zero tolerance policy for spammers and other crackers. Invest in at least a minimal firewall setup for your servers. Spend the time to learn the Unix tools for firewalling or look at a good NT package such as BlackIce (again depending on chosen platform).

    You can still be very successful with dial-up ISPs. Broadband will eventually either become cheaper allowing local ISPs to compete in that area or the government will eventually crack those markets open. It's just a matter of time.

    One last thing, offer Front Page extension support! I can hear the booing from the /. community on this point but that is what people want, especially from their local ISP. They don't want to mess with FTP regardless of how good the directions are. They want to use their nice shiny pre-packaged Microsoft Web Publication Wizard.
  • WebDAV is available with apache webserver so that can be used to cater to the MS FrontPage users.
  • For 240 users/24 simultaneous users, it would cost $695 USD a month for T1 dialup bank (PacBell) which is faster than T1 but much slower than T3.

    To charge 9.99/month per user is a pitiful trickle-down to your profit margin (if you factor in your bandwidth cost, rack rent, electricity, IP Class-C address, maintenance of a grand total of $1250 a month). You can cut only so much ($150/m) by trucking your T1 line to your home.

    If you want to pay yourself $100,000 a year (snicker) and work 90+ hours a week with account receivable, account payable, taxes, and unpopular tech supports for newbies as well as repairs doing this all by YOURSELF, you would need to attain a critical user base of 2,500, which of course, you'll have to install 250 more dialup lines, which spirals the cost up fast then slowly in an inverse logrithmatic scale to...

    An actual critical user base of 2,800 is more like it to just attain your 100K/year salary.

    By then, you'll want to start hiring specialists to offload your poor, tired, overworked mind.

    Thus the vicious cycle begins of garnering more user base just to pay for those employees.

  • I'm one of the former high school 1st level (actually every level) tech support employees you speak of. The ISP I worked for used ISP Power, and though it was bloated, I didn't mind it that much. However, I had no other experience to compare it to. What makes a good piece of software different from ISP Power? I'd be interested to know how much less annoying my job could've been. :)
  • Why limit yourself to the NASDAQ-burdoned ISP market for startup fun? Since it's obvious that any idiot can:

    1. buy a dummies book (or if you're too broke to do that, just post on /. and ask others who read the book to summarize - after all, you're short on time *and* cash)
    2. ?
    3. make your first billion!

    (credit due to UGVCA - Underwear Gnome Venture Capital Associates - for their patented 1-2-3 startup process)

    Perhaps we can suggest some other categories, since all you need to do is look for opportunity, and you know there's a buck to be made! Some ideas:
    - commercial aviation
    - copper mining
    - nuclear power plant construction
    - shipbuilding

    Any others I'm missing? Let's help this bored Aussie college student make his first million!


  • One idea: serve up a geek-friendly service. The Internet has been dumbed down so much that those who would like things like a full NNTP feed or shell access have trouble finding it with the right combination of reliability and price.

    Ahh! Yes, exactly! I've been wishing for so long that I could find a place like this in the desert of Qwest and AT&T. Of course it won't be the most profitable ISP ever. On the off chance that this is your primary reason for setting up an ISP (ie, you and your friends want "real" connectivity instead of going with a big dumb name), see about setting it up as some kind of cooperative. Hell, you could probably even get nonprofit status if you did it right.

    But a mass-market, for-profit ISP? Good luck.


  • I'd recommend outsourcing usenet. Usenet will eat up a *lot* of bandwidth and hard drive space. Let someone else handle it for you.

    Your mileage may vary, but I would recommend a company like SuperNews [], which hosts Usenet on their own high availability servers and simply charges you on a per connection basis. Start out with two simultaneous connections.

    People on /. who are knowledgable tend to forget that for 98% of users the Internet consists of email and the World Wide Wait. Usenet usage for the local 2,500 user ISP is never more than ten concurrent connections.

    I find the money an outsourcing company charges per month more than handles the hassle of maintenance, and if they are reputable (and you do not want to become a guru on the subject of usenet) the outsourcing company will supply much more thorough, more frequently-updated access than you could possibly provide.

  • If you get a chanellized E-1, which is required for 56k (T-1 channel in the US usually costs less than if you purchase per phone lines) you will start with either 29 or 30 channels/lines depending on how the telco sets up signaling.

    In the US there are penalties for renting only a partial circuit, you pay more per channel.

    For those who do not know, E-1 is European/Aussie circuit equivalent to T-1, but due to differences in signaling they get 2048 Kbps, as opposed to the US 1544 Kbps. Sweet, eh? :)

  • by JoeGee ( 85189 ) on Monday May 07, 2001 @10:36AM (#240430)
    From personal experience these are the best tips I can give you:
    1. Speak to your local telephone company at length. Ask them questions like "how old is your wiring", "do you support channelized E-1 lines for 56k dialup", "do you use load coils to extend your reach", and "what kind of distance charge do you have for bringing in a data connection"?
    2. You must be a very, very patient person. Be prepared to work long hours with the telephone company and your data connection provider. Be prepared to have them give you conflicting information. Be prepared for your local telephone company to pass the buck for connection difficulties to you. Be prepared to call your local telephone company on the carpet.
    3. Ask your data provider and your telco to provide you with their tech support hours. Ask them for direct phone numbers and contact names. If they limit their hours, ask them if they have extended support options.
    4. Get to know all of your service representatives on a first-name basis. Send them Christmas cards. Be nice to them. You may need to call in favors some time at 3:30 in the morning when your data circuit dies and you have to call their tech support.
    5. Expect to spend more money initially than you bring in. Do not expect your business to pay for itself in under twelve months, meaning have at least a twelve months' supply of operating capital available (the more, the better.)
    6. Suscribe to your competitor's service. You have to know how they perform, they set the standard which you must at least meet, or exceed.
    7. Give referral credits. Give a $5.00 discount on a month's service to anyone who refers a friend to your service.
    8. Pinch your pennies (or your five cent pieces ;).) You do not want to be a dot bomb. Have a three year business plan in place when you start up, stick to it.
    9. You are a utility, not a service. In the rural area where I live I advised the small startup ISP to sell themselves as a utility, meaning they are more like a cable company or a satellite TV provider than a service. In my opinion this helps to foster a "must have" idea in customer's minds.
    10. No one ever brings in a television to their cable company office saying "my TV is not working, what is wrong with your service", but they'll do it to you with their computers. Be prepared to answer all sorts of ridiculous questions, face all sorts of ridiculous situations, and have at least five percent of your neighbors actively hating you. :)
    11. Get an unlisted telephone number. People you do not know will be calling you at home at 4 AM, screaming in your ear, MY SERVICE IS NOT WORKING.
    12. If you are starting with yourself as the only employee, be prepared to forgo a social life. Search "monasteries, coping skills, celibacy" on Yahoo. Implement their suggestions.
    13. Know your equipment. Be prepared to study, study, study. Neither your telephone company nor your data provider are likely to be experts on the equipment you purchase, so be prepared to be on your own in configuring equipment. Before you buy, see if your telco has any prefered RAS equipment. As a suggestion, see if the equipment provider will work with your telco in configuring equipment.
    14. Find a support group. Get in touch with a few other ISP's not in your area. Use newgroups. Keep on good terms with knowledgable friends.
    15. Know your local laws regarding Internet and telecommunications. Get a user agreement, have it gone over by an attorney, and enforce it rigidly.
    16. Finally, never turn down a prescription for Prozac. Prozac is your friend. Prozac makes it better. Prozac may keep you from strangling the next guy who walks in and asks "I just bought a Commodore 64 at a rummage sale, and I cannot wait for you to connect it to the Internet." :)
    17. HEY, which reminds me of one more suggestion -- know your limits. Are you going to try to connect any DOS machines? What about Macintosh? How slow of a modem is acceptable? :)
    Think it over, carefully. It's not a living, it's a lifestyle. Go with God. :)
  • It'd be hard to find someone to sell you IP address blocks nowadays, (I know class A's are close to impossible) so that will be a big factor thats for sure This is a bit unrelated, but I think interesting: Mercedes-Benz owns an entire class-A block ( because they thought years ago that every car they built would someday have an IP address.
  • I and a few friends kicked around the idea of doing that a few years back. After writing up a business plan and running the numbers, we decided that there was no way we could make a profit doing it.
  • by Joel Rowbottom ( 89350 ) on Monday May 07, 2001 @08:59AM (#240435) Homepage
    There will probably be a lot of people say this, but the first answer which springs to mind is don't do it. It's very costly, and certainly no longer something you can do with a single Linux box and a DSL connection.

    That said, if you do want to do it, first thing you'll need to do is make sure your business plan will be profitable. I know it's tedious, but sit down in front of a spreadsheet program and work it all out: hard questions include:

    • Is it feasible? You did say you lived in the country - there's probably a reason there's only one ISP.
    • Will it make money? If not, why are you doing it - you're going to have to work out how to pay the rent some other way if it's not going to pay.
    • How will you support your customers? When they phone you in the middle of the night because their printer's stopped working, have you got the patience to help them or tactfully tell them that it's not your problem?
    • What if your upstream provider goes bust? Once upon a time nobody thought this would ever happen, but after several major providers filed for Chapter 11... :(
    • Do you have contracts? Seriously, in this increasingly litigious world you can save lots of hassle, stress, lost sleep, and ultimately cash, by hiring yourself a good lawyer from day 1 who will make sure that all the limited liability blurb is in your contracts. There are a lot of bedroom ISPs out there who have fallen over through someone down the road taking legal action, and them not having the money to fight it. Hence the case doesn't even get to court and the ISP is bust. Be serious: get your contracts sorted and stick to them.
    • How will you buy all the kit? Dialup stacks and routing hardware don't grow on trees you know - however I've seen quite a few good deals on Cisco dialup kit on eBay [], and if you're doing partial BGP to peer with your upstream providers a secondhand Cisco 3640 will quite happily do the job.
    • How will you manage the subscriber base? There are several prebuilt and homecooked packages out there, but you'll probably find that you don't really know what you need until you're up and running. Remember it's a rental system you're running, so you'll need to decide how to work the finances and contracts if someone cancels mid-term - do you refund them an unused portion of a month? What defines a "month", is it the number of days in that month or do you just split a year into 12 of them?

    Now assuming you've asked yourself the difficult questions and got satisfactory answers, go out and find yourself a good accountant or at least someone who'll take care of the day-to-day finances for you. If you're a scatterbrained geek like I, then you'll have to reel in some favours perhaps. I use my wife for that sort of thing - it works quite well ;)

    Then, and only then, do you start to work out your network map, and do all the fun stuff. Don't be a Dot Com ;)

    Note: I've been brainstorming while writing this so there will be a lot I've missed out. I've rescued and set up ISPs and businesses before, some of which have succeeded and some of which have failed. I speak from experience of 1991 through to the present, so don't take this as a base course in setting up a business ;) - usual #include <disclaimer.h> I'm afraid ;)))


  • This is not a good time to start a new ISP. Actually, the last three years have not been good times to start a new ISP.

    Just find an existing, failing ISP and buy them out for pennies on the dollar.

  • Yes, [] or known as or or some other ones.

    I used them for about a year before I moved away from the islands. They're such an awesome ISP. A buddy of mine knew the admin, del, and he's a very funny guy. I guess del is just sick and tired of computer illiterate people.

    It is funny [], though. If you dig into their site, there's a rant and rave list of emails from their customers.

    Also, for those who don't know Hawaii's pidgen talk, the letters are very humorous... only because I always though pidgen was silly. (A mixture of Japanese, Filipino, Chinese... basically all your Asian immagrants to Hawaii during the plantation days trying to speak English).


  • I helped start up an ISP in a small town in Mexico (and still provide tech assistance to the current owner).

    First of all, had I known what it was going to be like, I wouldn't have done it. As someone else posted, the newbie questions are a nightmare, and unless you're the only game in town, you're going to have to handle it.

    As for equipment, figure on 1 modem for every 5-8 users to start with. You can expand from there. Get an AscendMax for the dial-in stuff (avoid multi-line serial strips and external modems like the plague. These things are a maintenance nightmare). Get Radius or FreeRadius, and some sort of ISP billing software. Not 100% necessary for the billing stuff, but it sure makes life simpler.

    Okay, this is VERY, VERY, important for a small ISP with limited bandwidth: If you're running Linux (or another *nix), run Squid... It will save you TONS of bandwidth. We saw a 60% reduction in bandwidth when we installed it. This cuts down on your costs significantly, as you can add more modems with less bandwidth.

    You can probably get by with 1 or 2 servers. A small ISP doesn't really need much in the way of processing power. We were running 32 dial-in lines and a couple of 64K leased lines to other ISPs in other towns, over a 512K line to our provider. Our most powerful server was a 300mHz Pentium II, I think. None of the machines ever approached 50% CPU usage.

    I don't know what your situation is, logistically, but we did some wireless ethernet stuff as well, but that required getting a license (a real pain in Mexico) and then putting a transceiver on a tower (which we had to buy and have installed). From this we were able to offer up to 1M/sec to some of our clients (Internet cafes).

    Most importantly, you ask, is it worth it? Tough question. The tech support is a nightmare. Because of competition, if you have any, you can't price things very high, so it doesn't make you a lot of money unless you're huge. You also need 24hr monitoring of the system, even if it's only a program that can page (via modem) you when there's a problem.

    I certainly wouldn't ever do it again, but the guy who's running it now is enjoying it. He hired some other guys to do all the tech support, so that took care of the biggest headache. I doubt he's making much money, though.

  • As the friend (MBA friend) of many Dot-Com Busts, I would just say to you: Don't get too big too fast.

    You want to be big enough to fight that other company, but if you don't have to offer a service right from th start, DON' big enough to beat them, and then come out and show them CERTAINLY who's boss!!! You don't want to go down the same line as my friends, invest too much at the start, and then not be able to keep going.

  • "Starting an ISP in the USA nowadays is most likely a mistake. Here's why:" You have an interesting post, but completely irrelevant. This guy is asking about starting an isp in Austrailia.
  • A few ISPs where I used to live, Indiana, had a policy of no phone tech support. Free support was given via either email or fax. When you signed up you had 1 or 2 calls for getting set-up, but after that, it was email and fax only. This kept the number of full time tech support people pretty low.
  • They did allow people to buy a subscription to tech support. If memory serves me right, it was for a month at a time. It was only $5, the difference between their price and the state average for accounts that got free tech support. People who wanted tech support could pay for it, but those who felt like they did not need tech support could get the cheaper rate.
  • by Patoski ( 121455 ) on Monday May 07, 2001 @09:09AM (#240457) Homepage Journal
    There are several companies to whom you can farm out your dial up service to. They even take care of all the tech support for you which is by far the biggest pain in the ass. You get charged about $10/per customer to use their phone lines and tech support droids. That way you only have to worry about a pipe for your servers and high speed bandwidth (DSL/Cable) start up costs [which can be substantial]. Technically you could run your whole operation off of one box (I used to know of a small shop that did so years ago) although I wouldn't recommend it. When it comes to your servers think redundancy, redundancy redundancy! It's going to be tough for the little guy just starting out but there are areas that are more rural areas that are under serviced or have no service at all by the big boys. This would be your best bet I think. Signing up companies for domain and web site hosting should be your cash cow. The dial up folks won't make you rich but companies you get signed up should help alot. Have fun!!!
  • But seriously, nobody makes money as an ISP unless you are one of the big ones. The industry is extremely competitive, and I wouldn't be surprised if the big boys are keeping prices so low so that the competition dies out, before jacking them up later so they aren't running at a loss.

    Nowadays, dial is pretty much dying. You'd need to provide cable internet, which would probably mean that you need a cable company first. The other alternative is DSL, of course, but then your customers need to get DSL lines from the local telco, and you need to hook your network into the telco infrastructure as well. Since most telco's (at least my experience) run ISP's over their DSL lines as well, you'll probably find it hard to compete for price against them as well.

    Okay, so on to what you would need. Customer management, hardware to run your services (e-mail, news, authentication, etc.) off of, lease some POP's (point of presence) since I'm assuming you aren't a telco either, and don't forget contracting out a vendor for customer support (unless you want to do it yourself). There's more, but I'm not going to do all your work for you, I'm just trying to make a point.

    It's a tough industry. You'd almost be better off starting a company and reselling local and long distance services first (CLEC) then going off and creating a ISP off of that and hope to win the competetive ISP battle.

    Sorry to rain on your parade...

  • Amen, brother. As a tech-support guy myself, one other thing: be sure you can handle customer service.

    I recently jumped from a string of food retail jobs to (at last!) a Real Computer Job as tech support at a small ISP. I finally made the jump after getting absolutely sick and tired of having to deal with customers all the time; I was getting quite bitter and jaded. Now, I'm working in a tech job, it's cool neat and fun, but there's still the customer service part. It's a lot less than my old jobs, and there's a lot of other things about this job I really like that more than make up for it, but it's still there and it's still a significant part.

    The place I work at has a POP in a nearby city with a huge community of retirees -- and believe me, nothing taxes your (or at least my) patience more than having to deal with someone who a) is the biggest newbie ever, b) has slow, slow reflexes, and c) can't much see the screen to start with. I realize that's more than a little cruel on my part, but it's part of the job...and how are you going to handle it? Does it not bother you all that much, or (like me) are you going to want to reach out and strangle them? Can you keep your temper while telling someone for the nth time that, yes, you click twice to double-click, and the Networking icon really is there?

    Fortunately these calls aren't the majority, or I'd really go crazy. And they're a good 90 minute drive away, so it's not like I'll see them at the grocery store. But it sounds like you're talking about a pretty small town -- how are you going to deal with that?

  • These are really great points.

    One more I'd add to this list...

    18. You must balance the number of dial-in phone lines with the size of your customer base. Usually a 4:1 (customers/line) ratio works well, but you may consider 3:1 if you have active users and wish to avoid busy signal problems. Busy signals will cause attrition.

    Keep in mind that the 4:1 ratio won't kick in immediately... you'll need to start with around 12 lines initially, so the ratio will kick in when you get to 48 customers. At that point, you need to start adding lines. Be prepared, because you may sign up 48 customers during the first 2 weeks.

  • by mikehoskins ( 177074 ) on Monday May 07, 2001 @08:57AM (#240483)
    I had major problems with the equipment, users, telco, and software. I'd steer clear, IMHO. I lost major bucks on the deal, and I'm no newbie. You need to have major cash flow, have great business sense (far more important than your technical skills), need to really run it like a business, have an awesome accountant, market, have great customer service, oh and have at least semi-good tech skills.

    My point is that being an ISP is a BUSINESS, not a tech job. Trained monkeys can (almost) do the tech work, especially now that things are SOOOO easy. Hopefully, you can get funding and business people on board to run it. Business concerns are primary, tech concerns are either secondary (or even tertiary). And, hopefully your local telco or other local ISP's aren't better at running an ISP business than you are, or they'll kill you off....

    Nope, as one who has lost major money, it isn't worth it....

  • by slyall ( 190056 ) on Monday May 07, 2001 @02:06PM (#240493) Homepage
    I work with a larger Australian ISP so I talk with a lot of customers who run smaller Australian ISPs. Many of them are one or two empolyees, a couple of hundred customers and only around 128k/b of bandwidth. Most of them are never going to make money. Points to watch for:
    • Work out how much income you need. Normal dialup customers are only going to make you a couple of dollars per month each ( if you are lucky) so you need a couple of thousand just to pay wages for one or two people.
    • From the start decide how you are going to handle helpdesk. Even a small number of calls can quickly tie you up. If you are paying yourself $20 per hour and only making $2/month from each dialup customer then a 30 minute phonecall will use up 5 months profit from that customer. Others have suggested no-helpdesk ISPs.
    • Talk to other ISP people in your area about what costs and problems they are having with Telstra etc. You say the existing ISP in the area is bad for disconnections. Is this because of their equipment or because of the bad lines in your area.
    • Watch out for freeloaders if you have limited resources and cheap accounts. Think about what will happen if 5 of 10 percent of your customers stay logged in 24x7 running Napster type programs. This is a realistic number right now and only likely to get higher. Can your provisioning and revenue model support this? If you then you may need to structure accounts to avoid these customers or make them pay extra.
    • Make sure you provision realisticly. Don't think you can get away with a 128K/b upstream circuit and 20 dialup lines. If people can go to one of the bigger National providers and get decent download speeds then they won't touch you.
    • Plan for growth. Make sure you have aliases for all you servers (smtp , pop etc). Get your own AS number and own networks early. Make sure customers use server-assigned dns servers and dynamic IPs.
    • Don't even think of using modems. Get Ascend or Cisco NAS boxes or similar. A cisco router might be overkill at the start so use a dedicated PC running zebra and you upstream circuit until it is worth buying it. Get a switch for your LAN, hubs are not worth the trouble.
    • Shop around the different providers (telstra, optus, etc) for the best deal. Don't forget to check out the satellite providers. Look at getting a link into a local Ausbone node and perhaps buying bandwidth off someone there.
    • Run a transparant proxy server from the start. It'll say you huge amounts of bandwidth.
    • Don't overdo things. Buy 3 or 4 PCs to handle everything. Run indentical Linux installs on each ( Debian is good for this and easy to automate updates) and then divide your services between them. If you keep growing you can buy a new PCs every few months and split off services. When possible have multiple or backup smtp/mx/proxy/news servers. Make sure you backup regularly, with debian servers I just tar up /etc , grab the list of packages and copy them to another machine. Once a week I backup those to CDROM.
    • Take care with you advertising. It's easy to spend thousands of dollars on radio or Newspaper ads and having nothing to show for it. Target the people you are after, encourage customers to sign up others. Make sure that when people login to irc, chatgroups or usenet your domain shows up on their reverse.
    • Be careful with monthly bills. Don't give people credit. If they are not paying you then lock their account. Try and setup your system so people are paying in advance.
    • Keep your accounts simple. You shouldn't have more than 3 or 4 different types of home accounts (1 or 2 is better). Make sure each type of account is going to make money. Consider an offpeak account that only lets people login during the night or when usage is low.
    • MAke sure you terms and conditions allow you to close accounts for spamming, hacking and IMPORTANTLY for no reason at all.
    • If a customer is giving you grief and taking up huge amounts of your time then just close their account and refund their money. You should NEVER spend hours per week on someone that pays you $20-$30 per month. To make money you have to spend well under 1 hour per YEAR per customer.
    • Make sure you monitor your network. Something like bigbrother hooked up to a pager is a good start. Get the after hours numbers for your suppliers, get the cellphone number for your account manager etc. Look at going with multiple providers for backup. A flat rate main circuit and a $-per-megabyte backup is a good combination. Run you own BGP and you can make fallover automatic.
    • Have a backup computer or two ready. If one of your machines dies completely at 10pm on a Friday you want to be back up quickly. Even if you don't have multiple machines for everything a single machine you can convert to anything should be enough.
    • Keep your servers tidy. Get a rack and consider rack mounted PCs. Don't buy 1 or 2 RU machines unless you are paying for the space but full size rackmount cases are tidy and easy to maintain.
    • Make sure you have money to survive. You will need at least $100k to get yourself setup and surviving for the first year. There is no way you will be profitable during that time and more than minimal wages are unlikely.
    • Don't waste money. You don't need a fancy office, high end laptops etc.
  • If you are starting an ISP, make sure it's for love not money. The ISP business is a pretty bad economic model (at least as it's configured in the US, I do not know how they charge or what things cost in Australia.) Unless you are big enough to have ancillary revenue streams (ie. co-marketing deals, selling your users' privacy to direct marketers, etc.) it is tough to generate cash.

    The costs can be broken down in a few categories: - equipment (modems, authentication and proxy server, ups, etc.)
    - telecomm (telephone lines in, T1 out)
    - upstream ISP costs (the T1 has to go somewhere)
    - marketing (you're pressing millions of CDs right now, aren't you?)
    - labor.

    For a large ISP, the non-marketing costs are typically about $10/month per user and the amortized marketing costs are about $11-$15/month per user. Revenue is usually about $20/month per user.

    The largest non-marketing cost (on a monthly basis) is the telephone lines in. In the US a line in is about $20/month (depends on locale of course). One of the advantages of scale is that you can more accurately predict your likely usage. Assume, if you are not big, that your peak usage is 50%, so you need one line (and modem) for every two subscribers. This will probably still get you less than raves from your customers because the probability of not getting a dial tone is high (big ISPs shoot for a p95 or higher.)

    Marketing costs have been high in the industry because most ISP subscribers do not stay long at any one provider. So, after spending $100 or so to sign one up, the subscriber stays 7-12 months on average (plus, add in a free month of service to the "marketing" cost.)

    Hopefully knowing this you can avoid some of these problems. Good luck.

  • by yasth ( 203461 ) on Monday May 07, 2001 @08:55AM (#240506) Homepage Journal
    Hmm a limited (downtown only???) wireless ISP would rock, and would probably be your best bet for leapfroging the established players, as even in Cable/DSL there are some very large players, but wireless is still untapped(for the most part)
  • by HadronPie ( 212138 ) on Monday May 07, 2001 @09:03AM (#240512)
    My suggestions (as a user of multiple ISPs) would be to offer services such as:
    • shell-only accounts
    • static IPs
    • metered toll-free access
    • "free" email accounts
    • maybe email virus scanning at the server

    Charge a nominal monthly rate for the first three. Lump the other two into your monthly cost. Of course you must have automated credit card billing.

    Offer 24/7 toll-free tech support. Keep the call center well-staffed and don't punish/reward the support staff based on how long it takes to complete a call. Integrate the web and email support services. Setup a support evaluation survey that gives people points towards freebies if they complete the survey. Track this info like all hell. That costs a lot, obviously, but it'll be a very good selling point.

    Your advantage over the Big Guys will come from offering services they don't offer at comparable rates with friendly, effective technical support. There's not much else to an ISP.

    Oh yeah, game servers, irc servers, news servers.

  • I'd think that starting a small ISP nowadays would be likened to committing seppuku, but if you're still interested, you should try to build a loyal customer base that will be valuable when the big fish come to buy you out.
  • Dunno about Australia, but in the UK there are several companies that will set you up as a virtual ISP. You provide a Radius server to do authentication, and a mail/web server, they provide backbone internet connection, space, electricity, and modem racks. This cuts down on the maintenance for a small ISP severely, but will reduce your flexibility. An example is UK Linux [], whose servers run from the WorldOnline (formerly Telinco) premises.
  • Wireless has gotten pretty inexpensive in the last few months.

    Get your main broadband taken care of, get an antennae on a radio tower or three, and offer wireless internet to your community.

    I can't think of why this wouldn't sell, especially if you live in a college town. Offer the service to 'internet cafes', and give them an address block. It should sell decently enough to pay off.

  • The ISP my server is colocated at is, in the Middle of Nowhere, MN. It's the only game in the area. AOL dosen't even have a POP in this area. If AOL did move in, new business would dry up, and current users might gradually move to AOL. But for now, things just run with minimum staff, minimum breakage, and manage to turn a modest profit.

    Location, location, location...
  • I currently work as a networking professional at a growing financial institution, but before I worked at an ISP in texas. I spent quite a while in the support room.

    Like any support department, it was fairly dead-end. You either learned-out or burned out. Despite this fact, life was fairly problematic in our particular department.

    We had a saying that we were the red-headed bastard children of the organization. This was because we were at the bottom of the barrell. We always got the hand-me-down PC's, poorest, least usable office furniture, and what 'comfort' equipment such as microwave ovens, coffee machines and such from the other office that was broken, and could be 'written off' before we jury-rigged it back into operation.

    We made less than the receptionist and the phone-billing jockies despite the fact that we could do their jobs but there was no way in hell they could do ours. We frequently did odd-job coding and repair work for the entire company, yet the head bean-counter repeated suggested eliminating our department and out-sourcing support because we generated no revenue. Our meager wages were a black hole of finance that made the company's bottom line look bad.

    What the accountant didn't realize and what the company apparently still doesn't realize can be found with a simple 'like' query on the support-tracking database. Why do most customers sign up for our ISP service? We have superior support. Why do most customers quit our service for another ISP? They felt like they got poor tech support.

    What you discover working in tech support for an ISP, is that you are the only real difference between your ISP and others. What our manager knew and what we knew was that there was a correspondance between customer churn-rate and how happy the support staff was. The week that our gaming privaleges were revoked, we lost more customers than the week we got them back. Of course our personal problems weren't supposed to carry over ot the phones, but mood does indeed matter. If we got more ram or newer processors, and could open unfamiliar applications more quickly, our customers felt like they were getting faster, better treatment.

    One of our most successful techs was the guy who regularly brought his own cherried-out PC to work to play games. He did all his support work on his own box, and was able to do it quicker, better, and usually made the customer happier than when the rest of us tried to do the same thing on our hand-me-downs.

    The bottom line is that you can't afford not to have a quality support department, and that means keeping your support staff happy. That doesn't necessarily mean allowing gaming at work, but it does mean new machines, comfortable office furniture and nice accoutrements such as a refigerator, coffee-bar, and a kitchen of some sort. Don't spoil your support staff, but they're just like the transmission in your car. Sure, it's the engine that does all of the work, but you'll be sorry when your gearbox goes out. Treat it well, and it will treat you well.
  • I think that to have any hope of success, a small ISP is going to have to provide something more than a pipe and phone support. It's entirely likely that you will be unable to compete on price alone, and will have to provide something more to your users, such as providing high-quality access where there is no high-quality Internet connection (due to distance from dialup centers, poor phone line quality, lack of broadband), or provide something more than just the 'net.

    AOL (for all its truly bogus deficiencies) is a fine example - besides web, mail, and Usenet access, they provide an enclosed, relatively easy-to-use interface, built-in content filtering, and a host of other services that your average family users would want. For this, they get to charge quite a premium (something like US$22 - don't know what it would be in Oz).

    Attempting to compete in AOL's space would be foolhardy, but you could follow their example and pick some underserved segment of the population and give them the features they want. One idea: serve up a geek-friendly service. The Internet has been dumbed down so much that those who would like things like a full NNTP feed or shell access have trouble finding it with the right combination of reliability and price.

    I say, look at what the Internet isn't doing well right now, pick a niche you're competent to serve, and hope for the best.

    - B

  • Agreed! I'm in a dialup-only community, and I would happily pay an extra $1 - $5/month (and even take the pain of switching ISPs) if I could get a static IP address. Also, in this day and age of Evercrack and UO players, reliability is a must. My last ISP let me be connected for days on end, and knowing my gaming friends, any ISP that doesn't allow you to play a game of TFC without getting disconnected after a few minutes won't get business from a lot of gamers. So, be reliable, and try to offer features that the other guys don't have.

    Also, have you considered other business opertunities to combine with your ISP idea? Dialup is the only service many naive computer users use, perhaps you could start to advertise internet training classes (a security-on-the-net-for-dummies would probably do well) as well as a small upgrade/repair business if you want. If you are in a rural location like me, with high prices locally, there is a pretty good profit margin involved.

  • If there's one thing I've learned about ISPs, it's that the best way to get a lot of high tech users on your line is to make it free. People who don't pay for things always know what they're doing and never complain about your service. Honest.
  • That's true for the states (except possibly very rural areas), but what is the situation in Australia?
  • I thought wireless is limited by distance availability? For a rural area, especially the untamed outback like Australia, you would have difficulty reaching most of the customer base. Maybe if you want to bounce around from house to house on some sort of yet unheard of P2P wireless connection, but I doubt that would work out too well. I'm not an expert on the whole 'How To Start an ISP', but my guess would be that Wireless is not the way to go for a rural area.
  • While I do think you need a good business plan to start up something big, this guy can start small. In fact, if he knows many people in that rural town he can grab a few friends to help get it started and test things for him. Educational for all, and maybe they'll become partners in the Next Big Thing! After all, it takes someone with balls of steel and a love for risk to be an entrepenaur. He's certainly not going to do it if he tries to think through every last possibility. That's part of the excitement of starting a new business.
  • by Tech187 ( 416303 ) on Monday May 07, 2001 @08:55AM (#240566)
    To start a successful ISP you'll need a time machine that can transport you back 4-6 years. And going six years back might not even be enough. The biz is locked up now and the consolidation is in process. It's completely the wrong time to try to start one up. Unless you've got a source for cheap wholesale bandwidth and are way, way out in the hinterland somewhere that AOL, MSN, and Juno don't have a local number.
  • I see a lot people saying "its not going to happen", "quit now before you loose your money", "the ISP market is all wrapped up".... these are all probably true if you are in the US.... the Australian market appears to be wide open from what I see.

    Today in Australia would look to be equivalent to the US six years ago.

    Tech support is going to be your pain in the ass. Try to do it by email or web, and then for the boy's who want you to install their modem for them over the phone, you setup a 900 number (like a dollar a minute), make them pay dearly for the privilage. That way you would make money out of the tech support side of things.

    You could run your entire ISP setup off a 900 number. Run add's in the papers, "No subscription internet access", here's the number, login as "user" password is "password". Again it would pay you to run the service.

    There is no long term advantage to that kind of setup, people will only use it when badly stuck.

    A better plan of action would be to get setup with some venture capital that will carry you for 5 years. Run the service as a "free" service. Run your tech support off a 900 number. Build up a large customer base by giving out as many CD's as possible.

    Where the money comes in.....

    1) Tech Support, pull a few cables occasionaly to fund that new Lexus.

    2) Advertising. If you're smart, your install wizard application will configure all the user's browsers homepages to be your website. Sell banner advertising.

    3) Gather statistics, and play the local loop carrier game.

    I can guarantee you that if you get a significantly large customer base that you will be bought out by a telecom company within 5 years, yielding you your retirement money.

    The statistics that you want to try and gather is who's phone service does your clients use? If there is more than one carrier in your area, and the majoriy of your clients are on carrier A, then you gather the stats, you approach carrier B, and you formulate an agreement like this...

    Line rental for diallin = A
    Line rental for leased line trunks = B
    Running costs per quarter = C
    bigger lexus = D

    Tell carrier b that if they pay you A+B+C+D+ another 100K per quarter, that you will switch your lines over to their service.

    This is what the ISP game is all about nowadays. Telecom companies local loop interconnect fees.

    If Joe redneck spends on average 5 mins on the phone a day, and then suddenly gets a webTv and now spends from 9pm till 3am surfing porn, then there is more money to be made from an interconnect fee to carrier B's network than there is revenue to carrier A for having joe redneck as a client.

    Watch out for new telco's on the local scene, they are hungry for revenues, and will pay large sums for guaranteed interconnect fees.

    Once you sell the "interconnect" benefit to the telco's you will be guaranteed a new lexus every quarter, and can use the revenues from the 900 number tech support to fuel it.

    Pretty soon the telco's will get tired of paying you the quarterly fee, and will make you a brown paper envelope personal donation, along with a proper business buyout deal. This will be enough to retire on, and you can spend the rest of your days cleaning and polishing the extensive collection of lexus's in your back garden.

    Somthing that would be pretty cool to work on "in the bush" of Australia, would be to take the bush telegraph to the net scene. Provide internet via packet radio. Probably work out too expensive. But it would be cool.

    Anyway, best of luck, you can do it, and dont listen to the knockers, they couldnt begin to achieve the sucess that you are about to build.


  • Hi, I'm a unix admin from australia, and i used to be a perl coder for one of au's top 5 isp's, and I've been sitting back watching the ISP industry go up and down like a rabbit on heat. Me and many of my friends have looked at many ways to start an ISP that would be PROFITABLE.

    So heres some things you'll need to think about.

    1. Australia DOESNT have unlimited bandwidth plans for ANYONE who isnt a home user. A software company i was working for was paying 19cents a MEG for bandwidth

    2. Australia only has ONE main telco. Telstra. We dont have competitors to keep prices down.

    3. PHONELINES in australia are only garuntee'd a 2400 bps connection, thats quiet a bit under your standard 56k modem, although, this was a great excuse for shitty download speeds, just blame telstra.

    4. DSL would be difficult because you'de need to get a line directly from the modem to the exchange and use the phone exchange as an access server, although this isnt COMPLEX you'll have a good 3-6 months wait in getting a phone line connected, and when it does you'll be paying telstra for the bandwidth from the exchange -> your office and pay AGAIN from your office -> WWW.

    So if your REALLY set heres what you need to do

    get a 19 inch rack, pack it with linux/bsd systems, Dual p3-ghz with 256 meg ram and SCSI HDD's. And 2 different types of access server's. One Cisco one someone else, most people in australia are looking for CHEAP parts so you'll find masses of people buy shitty internal 56k software driven modems, thats why you need another type of access server.....Theres AU$200k ?

    Talk to some of australia's alternate phone / bandwidth providers. NOT TELSTRA. Powertel does bandwidth in Australia's CBD although they arent the cheapest. you's looking at about AU$100k
    setup and ongoing costs of AU$10k PLUS for your bandwidth. One thing you can be assured of is Upstream providers ARENT going to be going out of business.

    My ISP used to work with Primus, Telstra and Optus for phone lines, someons bargin hunting.

    Looking at Australia's ISP history, I'de recommend the idea of a previous /. reader of putting a nice fat wireless device on top of a building and selling wireless bandwidth. As for upstream bandwidth? get a business proposal, happeneing, talk to a few clients about your "proposal" and get them to express interest. Once you have about 20 or so perm clients, goto some big ISP, and tell them you have created a client base for whatever services, show them the buisness plan and try and convince them into installing a wireless device on the top of their building, and take 10% of what your clients are paying to subscribe.....

    Anyway theres my AU 4 cents (US 2 cents)


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