Fall 2000 Trends
From the 6th ISP CEO Roundtable

What happens when 60-CEOs take a break from a tradeshow to stop being rivals and start being allies? Peer-to-peer networking the way it was meant to be in the real world — no hardware required.

by Christopher Knight

Sixty chief executives officers operating Internet services around the country came together on Nov. 9 for the 6th Semi Annual ISP CEO Roundtable held during ISPCON.

As the honorary moderator, I want to share what we discussed at the roundtable so those CEOs that did not travel to San Jose this year might consider joining us in Baltimore next year.

In addition to providing you with data gathered from the group and information about current ISP trends as the CEOs see it, I'll include my [personal observations] and [comments] when appropriate.

ISP CEOs on growing the business
First, we took a moment to share some basic information about out businesses. The ISP statistics gathered at the CEO Roundtable include:

• 25 percent of the ISP CEOs in attendance also participated in an earlier roundtable.
  75 percent was fresh blood.
• 20 percent of the CEOs said their ISP is growing 10 percent a month, or greater.
  80 percent indicated their businesses growth rate was slowing down.
• 40 percent of the CEOs said their Internet service was growing through acquisition
  Of those, 40 percent think it's fine to pay more than $100 per subscriber.
  10 percent of the CEOs said they completed a deal requiring less than $100 per subscriber.

ISP CEOs on selling out

• 6 percent of the CEOs said their ISP was for sale right now.

[Personally, I thought that if we could all read minds more than 70 percent of the CEOs would have said their ISP is for sale right now.]

• 3 percent of the CEOs think 6-months of revenue is a fair price for their ISP.
• 25 percent said that 12-months of revenue is a good buying price for an ISP.
• 25 percent thought that 18-months of revenue is okay price to pay for acquiring new subscribers.
  

ISP CEOs on services

• 100 percent of the CEOs said they offer dial-up Internet access.

[This puts to rest the issue that if you want to call your business an ISP, you must offer dial-up or some form of Internet access—forever!]

• 95 percent of the CEOs said they offer Website hosting services.
• 90 percent said their ISP provides some form of broadband access. (Be it broadband be DSL, ISDN, T1/T3/E1, wireless or cable.)
• 100 percent of the roundtable members operate fee-based Internet services
• Only 8 percent believe no-fee ISPs are a threat to their businesses survival.

[This number is much lower than it was a year ago, as it appears free ISPs are struggling to survive and having a hard time paying their bills.]

• One CEO operates an Internet service for more than 100,000 subscribers.
• Two CEOs operate Internet services for more than 50,000 subscribers.
• Six CEOs operate Internet services for more than 10,000 subscribers.
• 85 percent, or 51 CEOs operate an Internet service for less than 10,000 subscribers.

[From a historical perspective, a year ago there was quite a few more 100,000-plus-subscriber base ISPs in business. Perhaps many of them have accepted offers to be acquired by "Bigger ISP Fish."]

• One CEO operates a virtual Internet service, with no facility-based infrastructure.
• 10 percent of the ISPs operate in rural, single PoP communities.
• 12 percent of the CEOs operate a single PoP ISP in a non-rural community.
• 20 percent outsource dial-up services through wholesale service providers.

ISP CEOs on sleep deprivation
When asked what keeps the ISP owners up at night, one CEO said "when a customer gets my cell phone number," while others stated that they lost sleep over telecom and bandwidth vendors who can't get their billing right to save themselves.

ISP CEOs on doing dishes
When asked if the Dish/Direct TV 2-Way Internet access threatened their business, 10 of the CEOs said they were worried about satellite services cutting into their sales.

[Keep in mind that most ISPs operating in rural and remote areas fear satellite services more that the average CEO.]

ISP CEOs on new revenue
In pursuit of generating a higher return from their network infrastructure:

• 8 percent of the ISPs offered private label services for their clients, and
• 10 percent of those CEOs said that they also sell excess capacity as a wholesale service to other providers.

ISP CEOs on outsourcing

• 80 percent of the CEOs outsource their USENET and Newsgroups feed.
• 20 percent of the CEOs support USENET and Newsgroups services in-house.

Go to page 2: ISP CEOs on marketing