Internet Service Providers, Application Service Providers and Portals
Internet service providers (ISPs) sell Internet access, domain registration, email, Web page hosting, Web page design and other Internet services such as security for extranets (discussed later in this chapter). Examples of Internet service providers are Genuity, WorldCom, Sprint, AT&T WorldNet, MindSpring, NetZero, Excite@Home and Road Runner.
ISPs support both dialup and dedicated Internet access. Dialup access is either analog plain old telephone service (POTS) or ISDN digital dialup. ISDN is a digital service that provides two telephone lines for either voice or data plus a signaling link all over one pair of wires. (See Chapter 6.) Examples of dedicated services are cable modems, satellite, DSL, T-1 and T-3 services. Dedicated services enable customers to reach the Internet without dialing a call. They are “always on.”
Dialup and Dedicated Internet Access
To reach the Internet, users with dialup service program their modem to dial the local telephone number associated with their ISP. The call is routed to their telephone company's central office, which sends it to the central office connected to their ISP's equipment. Most Internet service providers use competitive local exchange providers (CLECs) for this service. Internet service providers have banks of modems in remote access server (RAS) devices that handle calls handed off from telephone company central offices. The Internet service provider's equipment is often collocated with competitive local exchange carriers' (CLECs) central offices. (See Figure 8.3.) Each CLEC central office is connected to incumbent telephone companies' switches by high-speed T-3, 45 megabits per second (Mbps) trunks. The ISP has links directly to the Internet from the CLEC office or to a regional data center that is connected to the Internet. Some ISPs, such as Genuity, act as wholesalers and provide these connections to other ISPs as well as to end users.
Figure 8.3. A dialup connection to an Internet service provider.
In order to expand the number of points in which they have dial-in service, some Internet service providers partner with each other. An ISP will resell capacity at its site to another ISP that has no equipment in that particular city.
Most medium and large (and even small) businesses find that they need the capacity and convenience of high-speed dedicated access such as T-1, E-1, E-3 and T-3 service or new Gigabit Ethernet service. T-3 is very costly and only used by very large enterprises. All of these services, which range in speed from 1.54 megabits per second to 45 megabits per second are described in Chapter 6. The ISP arranges for a telephone company to run the T-1 line from the customer to the ISP premises.
The ISP data centers have email servers and routers with Internet connections. Large ISPs such as NaviPath, Splitrock (part of McCleodUSA) and Genuity offer business-to-business service such as Web design and Web page hosting in addition to their ISP service. These data centers aggregate customer traffic and send them to Internet backbone providers over high-speed links. Competitive local exchange carriers also operate Internet data centers for commercial organizations and for Internet service providers.
The Demise of Free ISP Service
Many Internet companies offered free ISP service as a way to attract customers to their sites and to build brand recognition. It was anticipated that Web traffic would attract advertising revenue and “click through” fees when users at the free site clicked on a retailer's link. At one time AltaVista, Juno Online Services, NetZero, WorldSpy and Freewwweb offered free Internet access. By May 2001, AltaVista had dropped its ISP service and WorldSpy and Freewwweb had declared bankruptcy. NetZero are providing only a limited number of hours at no fee and charging for usage above the limit. Ad rates for ISP sites, which have dropped from $50 to $75 per thousand of viewers to $3 to $5, are a major factor in the failure of free ISP service. Because of lowered revenues, Juno and NetZero combined resources by merging. The merged entity is called United Online Inc.
The relatively low monthly fees for dialup service for other ISPs have forced them to find other sources of revenue in addition to subscription fees. Main sources of revenue are advertising, commissions on goods bought from ads at the ISP site and transaction fees for services. Juno announced a joint project with researchers at the Space Science Laboratory of the University of California through LaunchCyte LLC. Under the program, Juno's customers' computers will process data for the Seti@homeproject which uses home computers to anaylze research data for medical data when the computers are turned on but the screen saver is active. AOL, which depends on advertising revenues and e-commerce fees, has raised its monthly fee by 9% from $21.95 to $23.95.
Application Service Providers (ASPs)
Application service providers act as service bureaus by renting software to corporations. The types of software they furnish range from voice messaging, database and payroll processing to e-commerce and customer relationship management (CRM) for managing Web and voice-based traffic to call centers. ASPs also provide Internet-based hosting of Web pages and billing type services to network service providers. The application service provider sector is new and revenues are still low. Some of their services overlap with those of hosting companies.
Some of these companies refer to themselves as application infrastructure providers (AIPs). Application infrastructure providers build the data centers and manage the infrastructure in which Internet service providers and application service providers keep their equipment. They also will arrange for network connections at the data centers they manage.
Portals—Content as Well as Internet Access
Portals are the first sites that customers see when they go online. They are the “door” to the Internet. The goal of portals is to earn money on advertising and a percentage on the sale of goods sold at the portal. Portals attempt to attract large numbers of users and keep them there. One way portals attract users is by gearing their content to particular communities of interest. For example, Tripod is targeted at college students and iVillage is directed at women. They offer free email, content, search engines, home pages, instant messaging, calendaring and chat services to attract users. They also offer information such as news, sports statistics and personal finance. Portals purchase content from content suppliers such as SportsLine.com that distribute sports news, commentary scores and statistics as well as audio and video coverage of events. SportsLine.com operates its own site as well as supplying content to AOL and Excite@Home. SportsLine.com has sites in Singapore and London. TicketMaster, 68% of which is owned by USA Networks, supplies syndicated information and online ticketing to portals and other Web sites from its Citysearch operation.
In an effort to enlarge their presence on the Web and attract traffic, broadcasters and companies with existing Internet businesses have bought and merged with portal providers. Large newspapers also have sites on the Internet most of which, with the exception of The Wall Street Journal, offer free access to their site. They do charge for copies of archived articles and receive revenue for classified advertising and ads. More media sites, such as Inside.comand Britannica.com, are starting to charge fees for access to their information. Table 8.1 lists the most popular Web sites.
| Internet Service Providers | Users in Millions, June 2001[*] | Comments |
|---|---|---|
| AOL | 30 | Owned by AOL Time Warner. Owns Netscape Communications Corp., AOL MovieFone, CompuServe, Digital City, iPlanet E-Commerce Solutions, MapQuest.com, three Internet music firms and Time Warner properties such as Time Magazine, Time Warner Cable, Home Box Office, Turner Broadcasting System and Warner Music Group. AOL also operates, with partners, ISP service worldwide in Latin America, Europe and Asia. The 30 million subscribers include CompuServe and international customers. |
| EarthLink, Inc. | 5.0 | EarthLink sells dialup and DSL Internet access. Some of its growth is attributable to its purchase of smaller ISPs such as MindSpring and OneMain.com. Sprint owns 29% of EarthLink. It's attempting to provide ISP service over cable TV facilities. |
| MSN | 5.0 | Microsoft built up its subscriber base by offering a $400 rebate to computer purchasers who signed up for MSN service. The rebate offer has been discontinued. Also owns Internet travel service CarPoint (Internet car-buying classifieds), Expedia, Hotmail, MSNBC, TransPoint (Internet bill delivery and payment) and WebTV. |
| Juno Online | 4.0 | Offers limited number of hours monthly of free ISP service with ad banners or paid service without banners. Also sells Covad-operated DSL service and in a few areas, cable modem access through Time Warner Cable. Merging with NetZero. New company to be called United Online. |
| NetZero, Inc. | 3.5 | NetZero provides mostly free email in return for demographic information about users that it sells to marketing firms. It also earns fees from ad revenue on its site. It now offers unlimited ad-free paid service. NetZero is purchasing Juno. The new company will be named United Online, Inc and will have a total of 7 million customers, 1 million of them paying customers. |
| Excite@Home | 3.0 | ISP for cable TV providers Comcast, Cablevision Systems, Cox Cable and AT&T Broadband. Owned by AT&T Broadband. |
| BlueLight.com | 2.8 | The partially free Internet service is an adjunct to its online sales business. Online discount retailer owned by Kmart. With Kmart now in bankruptcy, the future of BlueLight is in doubt. |
| Other Popular Sites | Search Sites Which Generate High Amounts of Traffic | |
| Yahoo! | The Yahoo! portal offers free email, chat, search engine, directory, news, online classifieds and shopping service. It also offers portal development service to enterprises through partnerships with software and database companies. Yahoo!, Inc. is independent. It has international operations through partnerships and directly in Latin America, Asia and Europe. | |
| Terra Lycos S.A. | Terra Lycos owns Tripod, HotBot, WhoWhere directory service, Angelfire.com, Gamesville.com and Wired News. Terra Lycos is controlled by Spain's incumbent telephone company, Telefonica. Terra Lycos has ISP, instant messaging and e-commerce operations in 41 countries. | |
| eBay | eBay has the most trafficked auction sites on the Internet. eBay charges fees to users to list and purchase items. It has chat rooms, bulletin boards and a vehicle for user feedback about buyers and sellers. It also offers auction services to small businesses. It has sites throughout Europe, Australia, New Zealand and Japan. | |
| About, the Human Internet | About, Inc. operates these 700 Web sites, each of which is managed by experts and focuses on a single topic. It also has Internet classifieds, email newsletters and chat rooms. It generates its revenues from advertising and e-commerce partnerships such as those with e-Bay and BMG Music. It has service in Australia, Canada, India, Ireland and the UK. Magazine publisher Primedia owns About, Inc. | |
| CNET Networks | Operates informational Web sites CNET.com, Builder.com, Computers.com and comparison shopping service mySimon.com as well as ZDNet Web sites, which have information about technology for consumers. | |
| Amazon.com | Amazon.com is the leading online provider of books, videos and music. It also sells computers, electronic items, software, tools and hardware and provides auctions. It operates the Toys “R” Us and Border's Web sites. In addition to the English language site, it has foreign-language sites in France and Japan and distribution facilities in Germany and England. | |
| iWon, Inc. | Web portal offering a sweepstakes to visitors. Users click on site links to enter the sweepstakes. Revenues derived from advertising and e-commerce fees. Its portal offers news, weather, sports and free email. | |
| Walt Disney Internet Group | Formerly Go.com; operates Disney Web sites including Disney Online, Disney's catalog and online retail operation, ESPN.com and ABC.com. It produces and maintains Web sites for the NFL, NBA and NASCAR. | |
| X10.com | X10.com is a retail site that offers hip, easily networked, wireless, remote controlled video and surveillance and PC controlled audio and video devices for homes, small businesses and college students' dorm rooms. It is owned by Hong Kong–based X10 Wireless Technology, Inc. | |
| Flipside | Operates online entertainment and gaming in the United States, France and the UK. Owned by Vivendi Universal publishing, which uses the content on its Vizzavi portal. Flipside is purchasing online gaming company Uproar. | |
| InfoSpace, Inc. | InfoSpace offers syndicated content such as news, weather and sports and searchable databases for yellow pages listings. It also distributes online games and calendars. Its information and services are on over 3200 affiliated sites. Its sites include Dogpile.com and Silicon Investor. It has agreements to provide content for wireless companies Cingular and Verizon. | |
| NBC Internet | Nbci.com offers information and streaming content such as animated shorts as well as free email. Revenues are from site advertising, e-commerce from on-site shopping links and direct marketing services. NBC plans to fold NBC Internet into its main operations because of low earnings. | |
[*] Internet service provider statistics from the June 8, 2001 The Wall Street Journal WSJ.com “NetZero, Juno to Merge, Creating No. 2 Web-Access Provider in U.S.” by Julia Angwin.