Bad business is popular in the Internet world. Even the largest companies are not immune. Case in point: USWest.net, the ISP owned by US WEST, offers a dedicated 128Kbit/sec ISDN line with static IP addresses for $US80 a month. But USWest.net has to buy the ISDN service from US WEST for $112 a month in addition to the cost of equipment, billing and support people. So it's losing money on every line. Perhaps the Internet service provider (ISP) hopes to make up for the money loss in volume.
This kind of fiscal foolishness doesn't even make people blink in the Internet business. After all, you have to lose money to make money -- or at least to have your stock price skyrocket.
Stock prices are a powerful force. I sit on the board of directors of a small ISP that was recently targetted for acquisition. The acquiring company's business plan was: buy a lot of small ISPs; sit around, trying not to lose money; and get bought by AT&T, MCI, Sprint or America Online. With this strategy, everyone makes money because the stock goes through the roof.
Well, this is the US, and that's certainly one way to make money. But one component of the equation was never mentioned: the customer.
When an ISP gets bought or goes broke, customers almost always suffer. Sure, there are rare cases in which the ISP was so destitute that getting bought was the only way out of Chapter 11 and things do get better. But that's the exception, not the rule.
What can you do to ensure that you don't end up with an ISP that's about to get bought or drop out? Unfortunately, not much. ISPs are acquisition targets, and many of those that don't smell the lure of easy money will turn up in bankruptcy court. However, you can build your connection so you can move to another ISP without unduly upsetting your users. Here are some hints:
-- Avoid dedicated circuits, such as T-1s. Look for a connection that goes over a public network, such as frame relay or ISDN. Adding a new permanent virtual circuit to a frame relay circuit can be done in a day; replacing a dedicated T-1 can take a month or more.
-- Write an escape clause into your contract. Sign up for five years to get a nice price break, but include a clause that lets you get out if you (and you alone) find that service or support is below an acceptable level.
-- Gain IP address independence. Use technologies such as Domain Name System, Dynamic Host Configuration Protocol and even Network Address Translation to ensure that it doesn't matter what your IP addresses really are. If you think that re-addressing would require, at most, a painful Saturday, you've done a good job. If renumbering your system is too painful to consider, your ISP may have you in a hammerlock. And if you're big and wealthy, you can get IP addresses that don't belong to any ISP - and that's the best situation.
Joel Snyder is a senior partner at Opus One, whose dial-up account got sold by Sprynet to CompuServe to AOL to Mindspring, at which point it was time to get a new ISP. He can be reached at email@example.com.