Best of the ISP-Lists

Battling the Rebate

Independent ISPs on the ISP-Investor list discuss the financial merit of rebating $400 on 36 months of prepaid service (at about $22 per month), as the Microsoft Network (MSN) is doing.

[December 9, 2000]

On the ISP-Investor list in November, BL asked,

"We are having a very hard time adding dialup customers lately, and it's only getting worse. Has anyone on this list checked into what percentage of new computer sales might be going to MSN, etc., because of their $400 rebate? Would you, as an independent ISP, match the $400 deal if there was equivalent financing? You would gross $10 per month for 36 months; the bank would get the rest, and the bank would take the risk."

A number of respondents suggested that the idea may be worth pursuing:

[MM conceded] "I would take the deal, provided that I would not have to provide technical support for the computer. Business is virtually dead compared to a year ago. We used to sign up many customers every day; now we can go a day or two with no signups at all."

[DQ agreed] "I would take the deal. I have contemplated offering two to five hours per month free for people who just check email and such, going to full price after the allotted hours were passed. As far as new signups, two to three a week is all we are getting. Our competitor was bought out by a huge company and is now offering six months free with six months' payment. I can't compete with that."

Others offered an alternate perspective:

[VL countered] "I for one would not take the deal. If you really want to offer $10 dialup access, then you should be doing that. There is probably a good reason you're not, and that's because its not profitable enough to support the service level you want to offer. Eventually, most of the free and cheap services will fail; it's happening already. Those who can hang in there will, and should justify their pricing with QoS."

[CT advised] "Be prudent and frugal; keep yourself profitable while maintaining good service to those who support you. Sit back and wait for the right opportunities to show up, because they will. Do not sit and fret over your lack of new signups. People jumping for the free deal are not loyal customers. You tend to your loyals and they will refer you."

[DE suggested] "Expand to a rural area near you. MSN and all those competitors can't touch you there. I did a 'coming soon' print ad in my rural area just to see the response, and the phone's ringing off the hook."

[ed. note] Also see MSN's "cancel my AOL account" form in .pdf format.

—End