Wholesale Dialup: Taking it Global

This privately held dialup provider currently serves 72 percent of the U.S. By next month, it plans to have its first offshore offerings in place.

by Christopher M. Knight [November 16, 1999]

StarNet's MegaPOP, currently the largest wholesale dialup service provider in North America, currently serves more than 620 ISPs, and is signing up new ISP customers at the rate of about 40 per month. The company has over 800 access numbers from 53 physical facilities, with CLEC relationships that assist in the backhauling of traffic. StarNet buys access from three backbones: GTE, Frontier GlobalCenter, and Intermedia Communications.

StarNet doesn't offer leased access, doesn't sell to retail customers, and hasn't spent a lot of time building a nationwide backbone. Because of this, it's been able to grow and deploy new facilities a lot faster with lower overhead. Thirty percent of its facilities are not linked together, but rather use the Internet to haul traffic around the world.

Specs & configurations
At the core of its design, StarNet has six regional hubs, which in turn have remote POPs linked to them. This allows MegaPOP to aggregate data from an entire region and backhaul it to headquarters for management.

StarNet is a true facilities-based provider: It doesn't lease ports from anyone; rather it owns and operates 100 percent of its access ports. In order to keep track of its network, the company maintains an 8,500 sq. ft. data center in Palatine, Ill., that is monitored 24x7 by on-site staff. All told, the company has 32 employees (kind of amazing when smaller competitors have triple the staff). Only three of these are in sales, leaving the rest to tend the network.

StarNet's modems are all 56k V.90. The company offers a content-filtered service option, along with additional services such as Usenet feeds, website hosting, and email services.

Wide blanket
StarNet currently offers service over 72 percent of the U.S. CEO Russ W. Intravartolo said, "We currently have the largest coverage area among wholesale providers, even though some of our competitors are claiming a 90 percent coverage area. They are wrong." Intravartolo backed up his statement with research that his company found after purchasing the US Government Census data. Corroborating this were additional figures from experts at CCMI (the Center for Communications Management Information), which compiles and provides the data used by all major telephone companies to determine termination and billing issues between LATAs, area codes, prefixes, and local calling area information.

StarNet's minimum account is $500 per month. This translates to about 60 users to break even. Some of MegaPOP's competitors offer lower mimimums, but StarNet's philosophy is that if you can't get at least 60 customers to make the $500 monthly minimum, then you're not that serious about being an ISP. Roughly half of their 620+ ISP clients are currently paying the minimum.

Roots
StarNet, Inc. was founded in 1995 as a regional ISP; the MegaPOP service began in April 1997 as a distinct profit center within StarNet. The company has been privately funded to date.

Intravartolo spent 12 years as a director of Motorola and took all of his profit sharing and savings to create the MegaPOP concept. Early in his career, working for one of the most entrepreneurial divisions of Motorola, Intravartolo learned how to be accountable for the profitability of his business from the get-go, and he uses this knowledge to make StarNet successful.

When asked if MegaPOP has plans to go public, Intravartolo responded that the IPO market is "full of companies who do nothing but lose money, then do an IPO to pay back debt, leaving only one sniglet of their IPO money to grow or build their business. Soon, the market will not be so forgiving when it comes to valuing companies in this industry"

StarNet is currently free of debt, but Intravartolo is finding that it may need to go public or partner with a publicly tradedcompany, just to be considered for larger deals. Right now, many large publicly traded ISPs have made it clear that they like StarNet but won't do business with them until they are publicly traded on the NASDAQ.

Offshore future
Intravartolo said that MegaPOP would like to be the "Largest multi-continent network of identical access technology." In about four weeks, the company expects to announce wholesale dialup access service for Tokyo Japan. It will be adding other countries soon. StarNet is in the "access aggregation" business and has no intention of competing with their clients.

MegaPOP is missing a few technologies that would make it a complete ISP-in-a-box f provider, but if you've got your own registration server, technical support staff, and billing system, MegaPOP can pretty much supply the rest. Moreover, the company has partnered with Taima Corp. (outsourced tech support) and Fine Point Technologies, Inc. (sign-up kits and online signup technology) to provide some of the services they've not yet brought in house. (MegaPOP doesn't actually resell these services, rather they refer you to their partners to make your own deal.)

Intravartolo points to StarNet's exclusive focus on wholesale dialup access as one of the company's strengths, and a point that differentiates it from competitors such as GTE, Concentric, UUNET, PSINet, and ZipLink. These companies offer many other services—both related and unrelated to dialup access—which may dilute their focus, according to Intravartolo, leaving them sometimes unable to stay as closely in touch with the latest technology.

DSL prospects
In early 1999, StarNet signed a deal with Covad Communications Co. to provide DSL to its ISP clients. They are currently doing so in six cities, and expect to be in 18 Covad cities very soon.

Intravartolo shared that there are many difficulties relating to the DSL side of the business, even questioning whether there is a real market for a wholesale provider of DSL. "DSL needs lots of legislative help to make it competitive against the RBOC's. Does anyone besides an RBOC even have a fair game at it?" he wonders.

For more information on StarNet's MegaPOP, visit the company's Web site or call them at 1-888-212-0099.

To Your ISP Success!

Christopher ("Sparky") Knight
Founder & Managing Editor of the ISP-Lists Discussion Community

—End

Read Chris Knight's profile of dialup wholesaler ZipLink.

Discalimer: Neither Christopher Knight, nor ISP-Planet, nor internet.com Corporation has any ownership interest in StarNet, nor were we paid to do this ISP profile. This ISP-Planet ISP Profile was done as a courtesy to ISPs everywhere. Send us your feedback at: feedback@isp-planet.com.