The largest state in the union provides the perfect ecosystem for its state association, which is thriving.

by Alex Goldman ISP-Planet Managing Editor [August 5, 2004]

The California ISP Association (CISPA) already is what most state ISP associations hope to become. It has taken on the company that inspired Scott Addams to create the Dilbert cartoon (PacBell), it has a large and stable membership, and it participates in the affairs of the state's PUC.

CISPA is funded by its membership, currently at about 112 ISPs, most of whom pay $550 per year, with larger ISPs paying more, plus over a dozen corporate vendors who also pay more.

Mike Jackman, CISPA's executive director, describes his organization's membership much the way ISP-Planet describes its readership. "Our profile is the profile of the ISP industry. Most are under 10,000 subscribers, and provide service to small businesses and agencies (such as schools, local government, and the Chamber of Commerce). There are a few regional ISPs and one national ISP, EarthLink. A few ISPs have a high percentage of the total number of subscribers."

Perhaps California is the ideal state for an ISP association. Much of what constitutes the Internet, from networking technology to hardware, was invented in California. Furthermore, California is the most populous state in the union, and also has the largest economy (if the state of California were a nation, its economy would rank in the global top 10). But CISPA's history is nevertheless a history of struggle.

Jackman has been with CISPA since late 2001. He says CISPA was legally incorporated as a non-profit in December of 1999, after a predecessor association, the High Speed Access Coalition (HiSAC) closed after losing an early battle with PacBell (see Pacific Bell Wins Key DSL Ruling).

Regulatory wars take time, and CISPA won its first battle with PacBell in April of 2002 (see California PUC To Regulate State DSL), when the state PUC asserted its right to monitor the DSL market to ensure that the RBOC did not abuse its market power.

Respect
Dane Jasper, president of CISPA and CEO of ISP Sonic.net, says CISPA has achieved a great deal. "PacBell was doing really bad things to service providers, and service providers were waking up to the fact that in five years they needed to be selling broadband at a profit and that any ISP that did not evolve would go out of business. PacBell was selling DSL for $39.95 retail, and selling it to ISPs for $39 wholesale plus a DS-3 loop for $4,000, and after all of those costs, you also had to have a network and do tech support and sales."

Problems didn't end with costs, however. "If someone hypothetically ordered our service, and if the tech had trouble installing it, the tech would tell the customer it would be easier to buy from the phone company."

The RBOC built a rewards system to encourage employees to do the wrong thing. "They had a program called ERIC, for Employee Referral Incentive Credit, that gave you points if you could get a customer to buy a service. Points translated into anything from a digital camera to a trip to Hawaii. The official policy was, 'we treat all resellers equally and fairly' but they had their wallets open and were handing out $100 bills every time someone made a sale. It was a conflict of interest. There were allegations of lost orders."

Jackman says that the key battle for CISPA—and for any ISP association—is getting respect from important regulators. "The State PUC and the legislature see this association as the voice of independent ISPs. That's a longer term battle won."

He says CISPA has also had to educate regulators and legislators. "I think they now see it makes sense to have competition, not just one cable, one DSL, and one wireless provider. That's like having GM, Ford, and Chrysler as your only car options."

Jackman points to the cell phone industry to demonstrate how competition helps an industry. "If there had not been many companies pushing an ever higher number of minutes, you wouldn't see so many people using their cell phone as their primary phone. That comes from competition. If the Bells had the market to themselves, there would be no flexibility in service plans and in minutes per dollar."

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