“The Internet has become the heartbeat of business these days,” says Danny Tehrani, CEO of Vancouver-based Computers Made Easy Inc.
Companies that provide access to the Internet – Internet Service Providers – are benefiting from the dependence of businesses on the Internet. According to the research firm, In-Stat, the total US Internet access services market will have “strong single digit growth through 2009.” Locally, Doug Palin, CEO of Infinity Internet, said his company, which has been providing Internet access since 1987, has experienced 50 to 100 percent year-over-year growth for the last three years, during which time, Palin said, they had “really been focusing on business customers.”
The dependence on the Internet permeates virtually every industry.
“We’d be dead in the water without it,” said Paul Covey, office manger at Pickett Insurance Agency Inc.
Most companies are moving or have moved to broadband. In-Stat data indicates that while broadband generated 50 percent of ISP revenues in 2003, it will account for more than 71 percent by the end of 2008.
Faster! Faster!
Speedier Internet connections have the potential to increase a company’s bottom line. Sal Cinquegrani, spokesman for New Edge Networks, said that a study by McDonald’s Corp. revealed that a six-second improvement in transaction processing such as credit cards was equivalent to a 1 percent increase in unit sales volume. A normal dialup credit card transaction takes about 12 to 15 seconds, whereas a broadband connection completes the same transaction in two to three seconds.
And customers demand quicker connections.
“Everyone wants everything now,” said Tehrani.
New applications, such as VoIP (voice over Internet protocol), point-of-sale, online ordering, loyalty programs, digital video monitoring and real-time online inventory and staffing management all require immediate access to back-end databases.
But speed isn’t everything. Palin said people consider their Internet connection a utility: “It should be seen but not heard,” he said.
In other words, the connection should always work. And if it doesn’t, the ISP should address all problems immediately – even if the problem is out of the ISP’s control, such as a severed line.
Quality of service is also an important criterion when a firm chooses an Internet service provider. Tehrani said that as competition among ISPs increases, those that cater to the customer will win the market.
“Price is not so important – service is more important,” he said.
Customers seem to back up this statement. Ken Moody, vice president and manager of information systems at the Bank of Clark County ranked customer service and uptime/quality of connection as the most important criteria.
“Cost is third on the list,” he said.
Even smaller companies, such as Vancouver-based Davidson & Assoc. Insurance, seem less concerned with cost than with quality.
“We needed respectable speed with consistent availability, at a respectable price,” said Bruce Davidson, the firm’s president.
Full-service stop
One-stop shopping is also important to many customers. In response, many ISPs offer a full line of Internet-related services, including web hosting and design, domain name servers, permanent IP addresses, and collocation.
To differentiate themselves, each ISP also offers unique services. For example, Computers Made Easy offers customized server setup, spam and virus filtering, and on-site repairs; New Edge Networks designs private networks that provide connectivity between offices without the risk of exposure to the public Internet. New Edge Networks also features multi-protocol label switching, which enables customers to prioritize applications running on the servers, so critical things get done first.
“Any business without a network is a business that is going out of business,” said Cinquegrani.
Airspeed Internet, a relatively new, wireless ISP based in Washougal, provides high-speed, wireless Internet service, along with co-location, server and PC backups, multi-site networking and digital security monitoring, and other services. For those customers who insist on a wired connection, Airspeed also makes available Ethernet services.
On the horizon
There are only a handful of ISPs headquartered in Clark County, and a couple in Portland. They compete with the “big guys” such as Qwest, Comcast, MSN, Earthlink and Verizon. Although the national providers can often beat local providers on price, they can lose out in terms of service.
“Most (local) ISPs take the extra step to ensure that the business user is capable of using the service as soon as it is installed,” said William Jorgenson, vice-president of operations at Airspeed.
Jorgenson also said he saw the next few years as growth years for the ISP market, with scaling and competition increasing. Other ISPs agree. For example, Tehrani said, “There’s still room for new guys here. Clark County is one of the fastest growing counties in Washington – we will see nothing but growth.”
GOING COLO
As the Internet services market heats up, many ISPs are adding business services to their offerings to diversify their revenue streams. One increasingly popular option is co-location, also referred to as colo, where a company’s servers are physically located at the ISP’s site but are owned by the company itself, not by the ISP.
Why would a company want to locate their servers elsewhere? First, many companies don’t have the proper facilities for servers.
“I’ll go into a company, and see their server sitting right next to the coffee pot in the corner of the break room,” said Doug Palin, CEO of Infinity Internet. “And I’ll ask, ‘where are your backups?’ and they’ll say, ‘what backups?’”
ISP datacenters are much more server-friendly, offering cooling, backup power generators, dust reduction, fire protection, automated backups and so on. Other reasons companies may choose to co-locate include disaster recovery, outsourced IT services and faster connection times for hi-bandwidth applications.
When choosing an ISP for colo, consider:
– Space rental and connection fees
– Physical infrastructure of the facility
– Security and access control
– Connection speeds
– Competency of ISP support staff
– Up-time guarantees
– Service-level agreement
IS DIALUP DEAD?
“Dialup is out – forget about it,” said Danny Tehrani, CEO of Computers Made Easy. However, Doug Palin, CEO of Infinity Internet, reported that “many of our commercial customers are still dialup.” In fact, he said his largest commercial customer is still dialup, and that just last month, another business customer bought $3,000 worth of new dialup services. Palin said that several factors could contribute to a company sticking with dialup, including lots of travel, a physical location where other services may not be available or simply “no desire” to upgrade. If a company does want to upgrade, what are the alternatives to dialup?
Tehrani gave these rules of thumb on broadband options:
DSL and ISDN. For companies with a low budget. The connection is less stable than other choices, and the speed fluctuates. Palin added that ISDN was “fading as a commercial choice,” because most businesses have switched to DSL.
T1. For companies that are starving for stability. It’s expensive, and it’s not as fast as some cable and DSL connections, but the speed doesn’t vary, is quite stable, and supports VoIP fairly well.
Cable. Similar to DSL, but faster. Suffers from the same speed and stability issues as DSL.
Wireless. Good for locations where wired services are not available. Can be either satellite or point-to-point (line of sight), and is a little more expensive than ground services.
It is this last type of customer – small to medium sized businesses located in areas where ground-based broadband service is not available – that is one of Airspeed Internet’s main targets. Operating on licensed radio frequencies, Airspeed’s wireless service is “carrier-grade,” meaning it is fast, secure, and impervious to inclement weather – making it an attractive alternative to dialup services. Currently, about one-third of Airspeed customers are commercial; William Jorgenson, vice-president of operations, indicated the company is now trying to expand their commercial customer base.
