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Net Connections
Where to Turn for an ISP
By Arthur Cole

• Start at the beginning
• Capital investment
• Digital knowledge needed
• Strong regional presence needed
• Cable ISP Round-Up
• How to select an ISP vendor
• Bottom Line

So your fiber is in the ground, youre all set for two-way communications, and you want to start offering high-speed Internet to your customers. But unless you have enough in-house experience to act as your own Internet service provider (ISP), youll have to bring in an outside firm to manage the service.

That, in and of itself, is not such a terrible thing: Have the provider maintain the service and manage the traffic flow for a split of the profits. The tricky part is selecting which provider best suits your needs and offers the most value.

To date, only a handful of ISPs serve the cable modem market. The two most well-known firms, Road Runner and Excite, come with the backing of leading multiple system operators (MSOs) and are targeting mostly first-tier systems of roughly 100,000 homes passed and more. Another pair making headlines, High Speed Access Corp. and ISP Channel, are battling it out for the smaller systems market. Yet another, Convergence.com is merging with C-COR and shifting its focus to include providing outsourced network management and design services to first-tier systems.

The criteria for selecting an ISP range from your location and terrain, the anticipated speed of cable modem adoption and the level of service you requirein other words, whether you are looking for a full-service operation staffed by your ISP vendor or a system that will be handed off following a training period.

Start at the beginning

According to leaders in the field of broadband access, the best place to start is to make an honest assessment of your systems capabilities and your goals.

"When you get to high-speed data, two-way capability is much more rigorous than simply facilitating pay-per-view (PPV)," said Robert Rusak, vice president of business development at Road Runner. "Our approach is to have a field engineering team work with the cable engineers doing measurement and testing on the plant and explain the type of tolerances that must be maintained and the effects that weather will have on the system. If you simply try to put cable modems on a normal system, it wouldnt work."

Once youre ready to commit, the actual hardware impact on your plant should be minimal. Most vendors report that a few racks of headend equipment are all thats required. Some vendors establish a connection to a regional monitoring system to keep tabs on performance.

With most vendors, the level of operational assistance and technical support is determined by the cable operator.

"Every arrangement is unique, but in most cases, we are providing a full-blown turnkey service," said Ron Hranac, vice president of RF engineering at High Speed Access Corp. "In some cases, there may be an operator with a very high comfort level (with the technology) where we get involved minimally. Some need help with reverse plant issues, and others prefer us to take care of the entire cable modem operation."

Capital investment

In most small and midsize systems, a turnkey operation is probably the best way to go. Only the larger systems will have the available capital and the expertise to handle a data service from scratch.

"Its a pretty big capital investment up front to acquire the technical and marketing expertise," said Marian Neely-Carlson, spokeswoman for HSA. "A turnkey solution is a matter of convenience because installation is a lot smoother and you have a revenue stream right away."

Still, one cable ISP is rethinking its turnkey approach. "Were finding that more and more second and third tier (operators) understand the fact that they would like to own these subscribers," explained David Ames, president of Convergence.com and soon to be senior vice president of broadband management services for C-COR.net. "They dont want to sign a seven- or ten-year contract and give up rights to a market they dont know how big it will be. One person recently said, I think 50 percent of my business will come from those services. Why would I give that up?"

Whatever you decide, the best part about it is that adding data to the network wont require expensive headend reconfiguration. Available technology supports both one-way and two-way systems, but a properly maintained two-way system can provide much better performance than a one-way system using telephone return.

Once the equipment is installed and customers are online, the biggest challenge is maintaining a smooth-running operation. No longer are you simply running a single businessyour data service will require its own staff to cover technical support, marketing programs, and 24/7 online or dial-in help. A full turnkey service likely will provide all this, but again, it will depend on the level of involvement you choose and the amount of revenue you are willing to share.

"The problem is (cable operators) want to deploy these services, but it requires a substantial infrastructure," said Ian Aaron, president of ISP Channel. "We cover the cost of capital for everything from headend equipment and broadband connectivity to service and sales support."

Aaron said ISP Channel looks for a 50/50 revenue split and has instituted a lending program to provide upfront capital for system upgrades. ISP Channel also provides very small aperture terminal (VSAT) connection to the Internet for remote systems or for customers looking for virtually unlimited bandwidth.

Digital knowledge needed

But is it really that simple? Just sit back and watch the money roll in? Not quite. Even a turnkey supplier is going to require an operator who knows the ins and outs of digital technology.

"We like to see that there is a basic understanding of the technology: how to measure digital signals, an ability to maintain the network so that digital will function the way it should," said Hranac. "The operator doesnt need to get involved with the data service day to day, but there may be situations where we will have to work together to troubleshoot a problem."

Another thing to be aware of when entering the data arena is that you likely will be dealing with a new set of equipment suppliers, meaning new business relationships will have to be fostered with companies that have broad experience in the data business but that might not know the particular needs of the cable industry.

"These arent traditional cable suppliers like Antec and Scientific-Atlanta," said Road Runners Robert Rusak. "These are people from Microsoft, Sun Microsystems and Cisco. New relationships will have to be established in a new technical community."

Strong regional presence needed

Still another consideration in selecting an ISP vendor is who is getting the lions share of business among neighboring systems. No, its not a matter of keeping up with the Joneses. A dominant service in your geographic region already has a strong network that your customers can more easily tap into and will most likely have advertising and marketing programs already in place.

Among the two rivals for the tier 1 systems, Excite and Road Runner, Excite is concentrating its efforts on the West Coast, while Road Runner is setting up shop in the East.

"In Florida, Road Runner, through its affiliates, will eventually be in front of every cable TV subscriber in all major regions with exception of where Comcast serves the East Coast," Rusak said. "Other states may have primarily , and it may not make sense to go with someone without an established presence. Part of it is technical in that it is more cost-efficient for (the ISP vendor and the cable operator) if they are interconnecting with a system that is already established in that region. You also get strong brand recognition that you can piggyback on when youre ramping up."

At this point in the game, its hard to say whether broadband data will be the moneymaker in the digital age. Video-on-demand (VOD), telephony, videoconferencing or some other unimagined service could become the must-have technology for the new millennium. The wisest course is to leave a little room on your system for all these services.CT

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