ASP Opportunity for Consumer ISPs

Many ASPs are setting their sights on the business customer, but consumers are viable application service customers, too.

by Gerry Blackwell

Much of the buzz around application hosting opportunities for ISPs seems to assume that business subscribers will be most attracted to the Internet computing model and first to buy in. But application hosting also makes sense for ISPs focused on consumer customers.

Cyber Beach Communications Corp., a small regional ISP with 4,500 mainly residential subscribers in Sudbury, Canada, recently took a pioneering step into the ASP market when it signed on as the first ISP partner of Hudson MA-based application hosting outsourcer C Me Run Corp..

C Me Run, with a portfolio of 15 or 20 applications, including Microsoft Office and Corel desktop application products, exclusively targets residential end-users. It offers ISPs a solution that requires virtually no capital outlay or technology infrastructure and very little ongoing costs other than marketing.

Easy does it
"It's a fairly transparent service," says Cyber Beach general manager Tom Pollock. "Other than engineering some backbone connectivity, there's nothing much technical to do. You're just adding this content layer. It makes it a nice business model for us."

Cyber Beach started out thinking it would make the move into ASP-dom by building its own infrastructure and negotiating rights with individual ISVs (independent software vendors). But when it met up with C Me Run at a trade show and saw the "sheer simplicity," as Pollock puts it, of the outsourcing model, the company changed directions.

The Exodus connection
C Me Run will serve the applications from a Massachusetts data center owned by partner Exodus Communications Inc., which will also provide all customer storage. A managed network link will connect it to Cyber Beach's POP in Sudbury, 260 miles north of Toronto.

Cyber Beach will pay wholesale rates for whatever its subscribers use. It bills customers directly, based on a data feed from C Me Run that will be integrated into the ISP's billing system. Pollock says his company expects to see margins of 25 to 30 percent on the C Me Run services.

Making a market
Besides engineering the backbone link to C Me Run's data center and integrating the data feed into its billing system—which require only minor efforts, Pollock says - the major expense for Cyber Beach is marketing. It's a joint effort with C Me Run.

"It's obviously in both parties' best interests to see their subscribers subscribe to our service," says C Me Run vice president of sales and marketing Paula Hunter. "So we're investing a few dollars and they're investing a few dollars."

For Cyber Beach, marketing the C Me Run services will mostly be through tried-and-true—and relatively inexpensive—media: e-mail, Cyber Beach's own Web site, and advertising in the local daily newspaper.

Go to page 2: Maximizing customers