Building an ISP on a Budget

So you want to build a dialup ISP from scratch? Wherever you are in the world, the same basics apply. Here's sound advice from an experienced ISP founder.

by Marlon K. Schafer of Odessa Office Equipment [September 12, 2003]

It's certainly not free to start an ISP, but it doesn't have to cost a bundle either. There is a lot of used equipment out there. Some of it is even available for free. Open source software is certainly an option for many people.

So what are the steps to follow when setting up an ISP? They are few but important.

Buy used equipment. You'll need a dialup concentrator. This item takes a T-1 line, with 1.5 Mbps capacity, and splits it into lower bandwdith lines for phone lines. Typically, a T-1 line can serve 24 or 48 dialup lines. Portmasters has a lot of the older Livingston/Lucent dialup concentrators available. Most ISPs used Portmaster units when they were available. I started with a Portmaster PM2eR30 back in 1997. The unit was about $3,500 brand new. Now they are available on eBay for much less! You want the eR version not just the e version. R is for Router, so if you get one of these you'll not even need to buy a router.

People also like used Cisco 2500 and the Ascend boxes. A Portmaster (or Max Ascend) box is a phone line to Ethernet converter. It takes multiple phone lines and converts those into one Ethernet connection.

Get an Adtran TSU or, if you have less than a T-1/E-1 you can use a DB-25 (parallel port) cable, to hook it to the Portmaster and off you go! Bang, Internet access. A TSU is is a device that turns the telco T-1 into a serial interface (didn't know that the little serial port on your computer has a version that'll go to 1.5 Mbps did you?) that can then be hooked into a router. These devices are often built into routers.

LT is "light", just missing a few toys that I've never used anyway. I paid $400 for my last used one. Those have come down a bit too.

You'll need a group of modems if you use a PM2e. I like the U.S. Robotics MP16 for that. The MP16 is a single box that contains 16 US Robotics Courier modems. These are still the best modems that I've ever found for our rural (i.e. old) phone lines out here.

Those used to be about $4,400 new! To hook the MP16 (or 8) to the PM2e you'll need some DB-25 to RJ-45 adapters. Then you hook a straight through ribbon cable (pin 1 to pin 1 etc.) 8 wire cable from the MP 16 to the PM2e.

Buy circuits. Don't forget to call your phone company and order a data circuit (56 Kbps/64 Kbps digital link, ISDN, T-1 or even DSL if it's available).

Buy phone lines. There are basically two different kinds: analog and digital. Analog or POTS (plain old telephone service) is what you have in your house, it's what you'd use for an mp16 based solution. Digital lines are usually called PRI or CTI lines. ISPs usually use PRI lines. Those allow you to sell v.90 (56 Kbps rather than 33.6 Kbps analog).

You want only paying users on your network. For that, you'll need some form of authentication system. For that most ISPs use RADIUS. It runs on pretty much any platform (NT, XP Pro, *nix). We use an NT version from www.talloncc.com. A google search for RADIUS software came up with 600,000 hits. You'll find something you like in there, but FreeRADIUS one is pretty popular.

Other decisions
Next you'll need to decide if you want to have a website and/or e-mail. Many of my customers use Yahoo, MSN, or Google for home pages and e-mail anyway, so you may not need to be able to host them yourself.

I try to get them to use our home page as that's where we let them know what's going on. Not all do, though. For a low end service, I'd probably not bother with it. If you are going to do it, there is software built into the latest Windows server packages (Windows XP Pro Server, Windows 2003 Server etc.).

I'm moving all of my stuff away from MS software though. We used it because it was cheaper to hire people who could use it. It's just never been as stable as my *nix (linux, bsd, etc) systems. I have found enough *nix people that can do custom work for me that I no longer need to rely on the point and click component of Windows.

For e-mail, we're using a program called Q-Mail. Many ISPs are switching to it. It's great stuff!

You'll want your own DNS servers. There are usually two, primary and secondary. I'm no DNS guy so I don't know how to set that up. It's another thing I pay consultants to do. It's an easy and cheap process, though. If you have a server that's just doing DNS, you can easily get away with a upper end Pentium or low end Pentium II. Those computers are very cheap.

E-mail for one or two domains can easily be done on a low end Pentium III machine with 512 MB of memory. Hard drive space and memory are more important than more processor speed. For webhosting, if you're only a few domains that don't have tens of thousands of hits per day, a similarly lightweight computer will work.

If you want to run the whole ISP on one PC, get modular products from www.cyclades.com. There's a lot to be said for that. Some of my competitors do things that way. They have a single PC that has two T-1 cards in it. One card is for the connection to the Internet and one card for the PRI phone lines.

When it comes time to order your upstream bandwidth and/or your phone lines, you'll have to contact the phone company. I use a telecommunications consultant for all such work, because they know all of the rules and special deals much better than I do. We use CTG3. They've saved us thousands over the last few years by knowing what to order and who to get it from.

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