For small ISPs seeking a broad range of services to help them compete with the big guys, US Online offers everything from e-mail filtering to two-way satellite—as well as wholesale dialup.

by Jeff Goldman [January 29, 2003]

Update: US Online has exited the dialup wholesale business.

Steven Klock, US Online's Chief Executive, founded the company in July of 1998 to help smaller ISPs compete in the marketplace. "The idea was to unite Internet service providers together so they could deal with some of the national competition," Klock said. "I felt that by bringing together lots of ISPs, we could build a dominant national force to stay even with the bigger guys."

In order to do so, the company provides services to its customers in three key areas—content, support, and access—in exchange for a setup fee of $150 and a membership fee of $300 a month. The services are ideal for the smaller ISPs that US Online is targeting: Klock says his customers typically have between 1,000 and 10,000 users.

US Online 25 N. Wenatchee Ave., Suite 207 Wenatchee, WA 98801 Voice: (509) 663-6031

Key to the content offering is an ISP portal, free to members in exchange for advertising space. The portal can be customized both for the ISP itself and for its local area. "Typically, when an ISP implements the portal, they see a doubling of their web traffic in the first 60 days," Klock said. "It's a great tool, especially for a small ISP; it allows them to immediately have a monster presence."

Other content services include both e-mail filtering and content filtering, which are offered to members at discounted prices. The portal was developed by InterSpan, Inc., which US Online acquired in August of 2000. The e-mail filtering and content filtering are both the result of partnerships. "For most things we do, we either own or have an exclusive relationship," Klock said.

A free, members-only e-mail discussion list is a key aspect of US Online's support services. "Some people say it's worth $300 a month just to sit on that list, because they're able to cancel service contracts," Klock said. "You call up Microsoft with an NT problem and they want $300 just to talk to you—and the guy on the other end of the phone has never run an ISP in his life. So there's a lot of value there."

US Online also provides second-tier support for all of their services, and offers outsourced technical support to its members through a partnership with GTN Communications in Canada. "They do a really nice job," Klock said. "We've worked with three or four different support centers over the years, and they do the best job of any that I've seen."

Access services
The third area of US Online's offering is access services. In providing wholesale access to its members, the company differentiates itself by offering not only wholesale dialup access, but also two-way satellite and wholesale DSL. "We're the only company with all three," Klock said. "We've taken a very aggressive approach."

Wholesale DSL is the company's newest offering. "We're rolling it out slowly with the different ILECs, but within two months, you'll be able to sell DSL in all of the ILEC territories across the United States, without any equipment and without any ATM connections," Klock said. "The pricing is on a per user basis, and it's standardized across the different ILECs."

Two-way satellite access is provided through a partnership with StarBand, with an extremely straightforward customer relationship. "The ISP simply orders the StarBand unit through us," Klock said. "There's a fee associated with the equipment, and then we charge them a monthly fee for the service."

Finally, for wholesale dialup, US Online works exclusively with Qwest Communications. "It fits in nicely with our back-end systems," Klock said. "There's an intranet where ISPs can access all of our services. When you sign up, you can watch yourself be set up all the way through the system. You can watch the process checklist get checked off, and you can see all your users."

Pricing is on a per-hour basis. US Online doesn't publish its prices, but Klock says the $300 monthly membership fee allows him to charge his members much less for the service than he otherwise would. "A lot of people charge a minimum service fee: instead, we have a monthly affiliate fee," he said. "It makes people a little bit more committed, and that's what's given us the cash to be able to survive tough times."

A proactive approach
When customers come to US Online shopping for a particular product, Klock says, the company faces competition from other providers of that product. Many customers, though, come looking for more of a total experience, which only US Online can provide. "We're well known for going out of our way to help ISPs solve problems," he said. "We have a very proactive approach."

In its efforts to be proactive, Klock says US Online has frequently been the first company to offer ISPs services like spam or virus filtering. "For people who are looking for an organization that's looking out for them, showing them a way to make more money rather than just being there to sell them a service, we really stand alone in that category," he said.

Tom Conley is co-owner of Hi Surfer.net, a small ISP based in Latrobe, Pennsylvania. The ISP offers dialup, hosting, and dedicated T-1 service to about 4,800 customers nationwide. Conley was one of the first ISPs to join US Online in 1998, attracted by the idea of strength in numbers. "US Online gives us the opportunity to compete against the major ISPs with buying power of services," he said.

As the ISP of choice for the conservative news site WorldNetDaily, Conley says he needs to be able to service readers wherever they are—but he's also simply attracted to the idea of serving a larger area. "Local ISPs have a lot of competition, but national ISPs can go into areas where there may be less competition in signing up prospective customers," he said.

The decision to use US Online for wholesale access, Conley says, came down to pricing and support. "They have the buying power, and their technical support staff is excellent," he said. "Support is very important to me—we as ISPs depend on other companies' support staff to back us up—and US Online supports their ISPs 100 percent."

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