Five Signs That It's Time to Become a Virtual ISP

It's the new year and it's time to ask yourself some tough questions about the business you run.

by Todd Grannis visp.net CEO [January 4, 2007]

There's really nothing like being in control—especially when you're in business for yourself. But for facilities-based ISP owners, that dream can slip away as the daily grind of technical challenges, rising operating costs, contract minimums, and customer support woes takes its toll.

We hear about this pain daily from prospective ISPs that have not yet leveraged a quality virtual ISP model—after a well-executed migration ISPs make more money while working fewer hours. Fixed costs are eliminated. Lost sleep and demanding technical challenges become a thing of the past.

"I no longer go home at night with a lingering concern that a server will go down, and I'd hear about it from my customers," said Osprey Network Technologies Owner Robert Lowery, who transitioned from a facilities-based ISP to virtual ISP. "I now have my life back."

The difference between a facilities-based and a virtual ISP
Many ISP owners got into the facilities-based ISP business model during the mid-1990s before virtual ISP technology became a reliable solution. A facilities-based ISP owns its mail, DNS, and authentication servers, switches, circuits, and other infrastructure. As demand grew, the ISP owner had to purchase new circuits to keep up. This was a double-edged sword because as demand for dial-up declined the ISP was often stuck with termination liabilities on circuits they were no longer using.

A wholesale ISP or virtual ISP provider aggregates the volume of hundreds ISPs. Each ISP offers Internet Services under their own company or brand name and sets their own prices, support policies, and manages their own service ethic. It makes sense to partner with a company that is highly specialized in providing back-office services for ISPs. For the facilities-based ISP owner, moving to a virtual ISP model means that they can now pay for services on a per-subscriber basis with margin on each account. They've effectively eliminated fixed costs and replaced them with variable costs which is a more sustainable business model in the highly dynamic ISP market.

The shift to a virtual ISP model can be a significant upgrade of services because you are leveraging the multimillion-dollar R & D investment of your ISP wholesaler. The result: greater subscriber retention, and a service that's more attractive to prospective customers.

Knowing when it's time to change
Here are several "Red Flags" that it's time to transition to a virtual ISP model. We've worked with hundreds of ISPs over the past decade that have reached this crossroad. Here are the warning signs.

1. Unused circuits are sucking your profit margin dry. It's the Catch-22 of the facilities-based ISP world. You've got just the right amount of subscribers and circuits. You're finally in the black and begin to show a profit. Life is good. But just when you start making money, along comes that one additional subscriber and you either send the subscriber to the competition or sign a contract for yet another expensive circuit. On the other hand, you might have latent capacity on existing dialup or DSL circuits. Either way, profit goes out the window. By migrating subscribers to a virtual ISP model, owners pay only for services that they need and use. Nothing more.
   
   
2. If you only have one qualified system administrator, your head is in the sand. The disastrous possibilities are real. We've worked with ISPs who've lost their administrators to death, accidents and…even Microsoft. You might not want to think about it, but it's a cold, hard reality. A qualified virtual ISP has the resources to maintain redundant administration. Unexpected catastrophes are met with a team of professionals while you enjoy your vacation or rest peacefully in your bed.
   
   
3. Billing and administrative stress has you pulling your hair out. New ISP services require new management interfaces. Just when you get adjusted to one, subscribers start hammering on you about some new service. It can become overwhelming. A good wholesale ISP vendor offers a highly integrated solution that reduces stress. ISP in-a-box® management software from visp.net, for example, provides ISPs and their staff with a consistent interface for administration, billing, and management of all common ISP services, plus and interface that allows subscribers to easily manage their own services without bothering you.
   
   
4. If a mission-critical server blew up today you'd be in a world of hurt. You've heard stories of ISPs who've had a server go down, and lost droves of customers. Often, these ISPs never recover. In this business, an ounce of prevention is worth a pound of cure. However, designing and maintaining your own highly reliable systems is very expensive and requires significant administrative skill. By moving to a virtual ISP, such as visp.net, an ISP leverages existing engineering expertise and layers of redundant architecture. Every mission-critical server is RAIDed and mirrored to an identical RAID backup system. Typical uptime exceeds the carrier-class gold standard of five nines or 99.999 percent. That's one less thing to keep you up at night.
   
   
5. There's no future in simply maintaining or even losing subscribers. Growing your ISP isn't as easy as it used to be. Competition is everywhere. You've got to be better, and potential customers need to know about you. As a local ISP you have significant advantage over national competitors, but when you're busy managing everything else when do you have time to grow your subscriber base? By partnering with a wholesale ISP you have a quality of service offered by national competitors, such as 24-hour support. When you hand off 24/7 administrative chores, you free up time to perform a much more critical function—growing your ISP.

In the end, the choice to leverage virtual ISP technology is a business decision. As the ISP business has become increasingly dynamic, shrinking profit margins require ISPs to eliminate fixed costs. There's no more powerful way to cut your overhead and improve your quality of life than by partnering with an experienced virtual ISP provider.

— End

Todd Grannis founded privately held visp.net in 1996. The company develops software that enables ISPs to reach more subscribers, improve their services and significantly reduce management and support overhead.