A National DSL Rollout

With DSL regulation poisoned by uncertainty, and the telecommunications market bare of investment, a privately owned ISP survivor throws its hat into the national broadband ring.

by Alex Goldman ISP-Planet Associate Editor [October 20, 2003]

Founded in May of 1999 in Los Angeles, DSL Extreme has grown rapidly. The company claims five figures' worth of each DSL users (mostly PacBell, with some Verizon) and dialup users. A smattering of T-1, frame relay, and webhosting customers round out the business. Domain name registration is courtesy of TuCows.

The company has won very positive reviews at BroadbandReports, with responses from 406 users. In a further indication of a proactive support team, a DSL Extreme tech has answered complaints and questions posted to the site.

Jim Murphy, president of DSL Extreme, says the company does well by getting the basics right. "We don't reinvent the wheel. We do what's out there. We run a lean and efficient operation without layers of monopoly bureaucracy. We answer the phone and provide customer service. We have spam blockers and popup blockers. The spam filter was developed in house, and has end-user customization. We have our own tech support that's there 24 hours a day for both dialup and DSL."

Being a small company is a key strength. "It still feels like a startup. Everyone knows everyone, and we don't see a lot of employee churn. We're in the suburbs of LA, and people are here because they want to be here."

If people see DSL Extreme as extraordinary, it's because most companies fail to do even ordinary things. "If we deliver as we promised, and call people back when we say we will, we're ahead of our competition. It's a sad testament."

Collaboration with the phone company
One key to DSL Extreme's good track record is the company's relatively large size. "We're one of SBC's biggest providers, based just on our California offer," says Murphy. "We won the SBC award for most data sales in the ISP business in California for two years running. Verizon tells us that with several thousand Verizon DSL customers, we're their fourth largest wholesale customer in the country—and we don't even do the East Coast yet."

Being recognized as a key ISP gives DSL Extreme account representatives on the inside of the telco maze. "When you get to be the size that we are, you have your own dedicated team at MCI and SBC and Verizon."

Even though it was founded in 1999, the company is a survivor in Internet time. For example, the company has many Verizon customers who were originally GTE customers before GTE was bought by Verizon, and was therefore able to become a significant Verizon customer without interacting with the company's bureaucracy in the early stages, when it would have been insignificant to Verizon.

The MCI network is the old Rhythms network, and features upload speeds of 768 Kbps.

The company has invested in building infrastructure to work with the wholesalers. "When we started, we faxed in orders and followed up with phone calls. Now we have an XML connection to their OSS."

Real marketing
The company has been very proactive in its market research. "We do our customer surveys at every interaction. Any time you talk, e-mail, or connect for a live chat, you're sent a survey that asks about your experience."

We placed two test calls, one to the dialup help number and one to the DSL help number. The dialup toll free number immediately told us how many people were ahead of us, and gave us the option of exiting the queue and leaving a message. We assume the DSL help line will soon offer the same.

DSL Extreme will have to increase DSL tech support, as its headline price is bound to attract customers. Having a $29.95 headline price is great, even for a 384 Kbps/128 Kbps service, encourages people to look closer at the company's offerings. "Many people look at us because they like the price, but then choose a higher priced plan," admits Murphy.

The company markets its product through radio ads, and even gets dialup customers through those ads. But being an established company with a regional name is more important than any ad campaign. Notes Murphy, "word of mouth provides 50 percent of all new business."

Extreme opportunity
DSL Extreme seems to targeting bargain hunters. Joe Laszlo, senior broadband analyst for Jupiter Research, which is owned by the parent company of this website, says that ISPs need to pick a niche, as DSL Extreme has done. "Although it is expanding its geographic presence, DSL Extreme will do best to target a very specific audience segment; any sort of general, undifferentiated pitch will likely get lost amidst the marketing dollars the cable companies and telcos are spending to promote their own broadband offerings."

Laszlo also points out that it's a tough time to go national. "From both a business and a regulatory perspective, it's an incredibly uncertain time for any regional provider to be thinking about undertaking the investment required for a national expansion. Neither AOL nor MSN could make the economics of a national broadband access offering work; it's hard to see how a vastly smaller company will be able to succeed where they failed."

Nevertheless, with the right combination of local focus, DSL Extreme may be able to implement what larger, less nimble, less customer-focused companies have failed to do.

— End