Is the small ISP going the way of the Dodo?

I had lunch today with a the owner of a very well-respected ISP here in New Mexico. He is a very likable fellow, very technical and works very hard at keeping his customers happy.

The problem is, his business isn’t growing.

For years, he benefited from high double-digit growth rates in net residential and commercial accounts. This past year, his net growth rate for new accounts is around 5%. He blames it on the economy, acknowledges a deficiency in marketing, and feels that all he needs to do is offer a new backup storage service to get folks enticed to do business with him.

The truth of the matter is far more sinister. His business, like all small ISP’s, is in risk of extinction. The large players, like Qwest and Comcast, are now competing in a deregulated marketplace. They aren’t giving ISP’s the same access to their networks as before. They are bundling services, and throwing in Internet service as a loss-leader.

His people are disenfranchised. They lost that “spark” that keeps them motivated and going that last mile for customers. It’s a downward death spiral, and it will take some serious changes to turn the business around and compete effectively in this new marketplace. He is stymied, and falling back to what he knows best: Introducing new technical features that will have little appeal, especially when ISP-neutral solutions are readily and inexpensively available.

What he needs to do is:

• Refocus on customer service, and delivering a customer support experience that far surpasses what the big-boys can provide.
• Create a corporate proforma, with realistic goals on number of accounts and value-added service purchases.
• Create monthly financial reports that can be disseminated to the company (and public).
• Publish a monthly executive dashboard of business metrics, to help employees better understand how the company is doing and what is needed to grow.
• Provide the same suite of services the big boys provide, that are easier to use, better and more cost effective. At a high-level, broadband capable voice, data and TV. Also, he should include (at a minimum) email, DNS, web hosting, automatic virus protection and spam filtering, and optionally filter out adult content.
• Finally, he needs to offer services the big boys simply cannot. Because his customers are local, he could offer free “computer checkups” and disaster recovery for clients. He should leverage his local access to clients.

Over the course of the next month or so, I’m going to publish articles that offer specific examples and explain how to create the various tools for the small ISP: Proforma, proper financial reports, executive dashboard, exit strategies, broadband network strategies, etc. Stay tuned!