Best of the ISP-Lists

When Wal-Mart Sells AOL Dialup for $9.94

Members of the ISP-Marketing list discuss competing with big business. When Wal-Mart and AOL gang up against the home team, small businesses fight back with value-added services and alliances.

[September 24, 2001]

On the ISP-Marketing list in September, EA observed,

"Check out Wal-Mart's new ISP. AOL and Wal-Mart have a deal together: $9.94 for unlimited service. It'll be interesting to see how AOL rationalizes this with their users who are paying $23.95 a month. All of you small ISPs in 'rural' America who thought you were immune from AOL competition now have another big competitor!"

A number of respondents suggested that there's not too much to worry about:

[CS offered] "Most people don't want to change their e-mail address, because it is a hassle for them. So even if it takes a small percentage away from your customer base, that's okay. Stick to what you're going to make money on, and if this means raising your rates every year by a buck or two, do it."

[BH agreed] "People hate change of any type, and this includes changing their e-mail address."

[RL added] "People want good service and a familiar voice to talk to when they have a problem, not value-added junk they do not need. Most people are happy with the basic services and a couple of upgrades, and that is it."

[SW noted] "They don't have an access number here; not yet, anyway. Still, I can guarantee they will be handing out their CDs here in town, and people will sign up, and it will be long distance. Our local Wal-Mart handed out AOL CDs for a long time, and I had countless people signing up with me after they had gotten their $200+ phone bill for dialing long distance for AOL access."

MY warned that Wal-Mart has a history of being dangerous for the little guy:

"Wal-Mart has already mowed down most small stores who had the same expectations about what would keep them around—service, local identity, and customer relationships."

Others suggested that it's a matter of competing with AOL's range of services:

[EA advised] "An e-mail address is not going to hold subscribers to you. Value-added services will, but most ISPs do not offer any! Join an association that can find value-added services for you and lower your costs. The American Alliance of Service Providers, which is free to join, has been able to get dialup wholesale access for its members direct from a backbone, not a reseller, at under $4 per month. No small ISP could have achieved that on its own. They also have a variety of value-added programs available to the small ISP. Unless small ISPs get together and work together, you are just waiting for the large guys to wipe you out."

[MH agreed] "End users go back to AOL because their new ISP doesn't give them any goodies. I've heard some small ISPs say, 'we cater to the savvy user'. That's, what, less than one percent of the possible clients you could have if you'd hold their hand a little? Why did AOL grow so quickly? Fun sticky content and a CD in everyone's mailbox. And now every Wal-Mart shopper is going to leave with a CD in their little blue bag."

[BH recalled] "In the early days, ISPs were run by techies, and had techies as their primary customer base—and techies aren't that interested in warm and fuzzy content. Over the years that's changed, but ISPs are still largely run by techies. Now their customer base wants the content, but they can't get it from their ISP, so now they access through the ISP and use a content provider for their home page. It is hurting the ISP more than they realize."

[LY added] "I have found that my small ISP customer base is extremely interested in value-added 'junk.' We are growing by roughly four percent per month, and the only thing I can factor in is the new value added stuff I keep adding, plus a little newsletter. So far, we have started free virus and spam scans, free virus cleans if they get one, flat rate repair, and national roaming. We have others in the pipeline—and our users know it. They may or may not need it, but they like it. I wish I could add more and more value added stuff. It makes me money, and keeps my customers happy."

— End