ISPs Are Alive and Kickin'

Avi Freedman gave the keynote speech for day two of the ISP Business Expo 2002, mixing the serious and the irreverant as he pointed out that medium-sized, privately held ISPs may be the most profitable Internet businesses on the planet—and that those in the business earn every penny.

by Patricia Fusco Managing Editor of ISP-Planet [April 5, 2002]

[Dallas, TX] The entire staff of ISP-Planet.com has been in Dallas, Texas since Monday hosting, alongside the ISP-Lists.com, the ISP Business Expo 2002. For those of you who couldn't join us, the ISP Business Expo is picking up where ISPCON left off, providing an event where your next good business idea just might be served with a steak the size of Rhode Island or over a quick cocktail after the show.

There's a certain level of irreverence that coincides with an event like the ISP Business Expo. Which is why Avi Freedman's keynote address on Wednesday stuck an old familiar chord with attendees, one that many of us haven't heard for a long time.

Nestled between his border gateway protocol (BGP) humor, which includes the words to a "BGP Song" sung to the tune of "Yesterday," and recounting the time that Netaxs' telephone bill was a 3,000 page document delivered by UPS, Freedman reminded us just how much fun the ISP business can be.

For those of you not familiar with Netaxs Internet or its news propagation services, Freedman also happens to be the Vice President and Chief Network Architect of Akamai Technologies.

The ISP side of Avi
Netaxs was founded in 1992 and delivers T1, T3, OC3, and OC12 private line services to business clients along the Mid-Atlantic coast. The company also offers collocation services and dialup access for Linux and UNIX users because it still offers UNIX shell accounts, which is something that's hard to come by nowadays. Netaxs also has Macintosh OS support staff.

Netaxs is a national tier one Network Service Provider (NSP) and backbone provider that calls Conshohocken, Pennsylvania home. Its Lee Park office complex is just outside Philadelphia where Netaxs has a 33,000 square foot core server collocation facility. Netaxs staff consists of about 40 people—that's 50 percent technical support and circuit provisioning experts, or what Freedman fondly refers to as "butt-cracks," and 25 percent sales and marketing types, dubbed "sales weasels," of course. The remaining 25 percent is Freedman's management team, human resources department, and accounting department.

ISP business challenges
Freedman is old school, which in this day and age simply means that an ISP owner-operator is "always selling all the time." One of the more interesting points that Freedman made is that the sales side of things has actually gotten easier for ISP businesses since 1995 because clients have actually figured out what they're buying and are more willing to buy backup systems today than they were a year ago. But this doesn't mean that all sales-related ailments have been cured.

The same old problems remain for Netaxs, as with most ISPs—you have to sell services that your technicians can actually implement. Freedman surmised this all too common problem with a joke:

"What's the difference between a used car salesman and an ISP sales rep ISP? A used car salesman actually knows he's lying."

While other operational issues like being able to compare local loop costs and bandwidth pricing with other ISP operators are hindered by non-disclosure agreements, Freedman still believes that there is money to be made by regional ISP businesses.

"I believe regional ISPs are the most profitable ISPs in the world," Freedman said. "Qwest, WorldCom, and Level 3 [among others] are not profitable. But those people that are still out there that didn't get bought up during the last wave of ISP rollups are still making money on dialup right now. I just don't know who they are."

At the ISP Business Expo in Dallas this week we learned a little more about the people behind the next wave of success stories heading toward regional ISP business models are and how they are overcoming everyday business challenges like skyrocketing local loop fees, billing for services, and technical support systems. Yup folks, successful ISP operators are still out there and over the next few weeks we're going to introduce you to a few of them—we'll make sure to introduce Avi Freedman to them, too.

— End