Suggestion for ISP estate’s future development

The initial service after commercialized Internet
(1) Dialing up through narrow band:
In order to meet the increasing client’s need in dialing-up service, ISP has been developed since the commercialization in 1993. From the beginning to the year 2000, ISP mainly offered the clients the dialing up by modem through Public Switch Telephone Network (PSTN). With the progress in modulation technique, the speed has improved from 9.6kbps to 56Kbps. This stage is called narrow band dialing up. The expense depends on the amount of time spent on the Internet and this is ISP’s main income. During this period of time, ISP’s value-added service is mostly basic one, including Domain Name Service (DNS), e-mail account and saving service, which represents service provider and search engine’s portal site. Basically, the service is free; therefore, in the initial narrow band dialing up, ISP’s service focuses on the improvement of client’s dialing up quality, close cooperation with the telephone company, a cleaning out of dialing communication service and the rising of successful percentage. The main point is to bring the equipment-using rate into full play.

(2) The craze of .com:
In this stage, American company Yahoo uses website search engine, similar to the telephone number inquiry function, to come up with a business mode of Internet Content Provider (ICP). The ads on websites are its main income. With the approaching of technical lowest level and the help of Internet new though, people surges into the market in no time and make “com” a craze. Under this kind of situation, ICP outnumbered ISP in the cost of stock market. Though the coexistence of ICP and ISP is stick-and-carrot as well as complement, most of ICP can get rid of the business mode --- free supply on content service; ads as the main income--- and declined in 2000. Compared with the income at that time, ISP is obviously healthier. ISP, cooperating with fixed network, creates a considerable Internet communication and local call fee for themselves and the fixed network. Quite a lot marketing competitors are thus attracted by these two benefits and help pave a prosperous road for Internet.

(3) Wide band’s gaining prominence:
In the late 1999, cable TV and traditional telecommunication business present Cable Modem and ADSL respectively. Cable Modem’s initial bandwidth is higher than telephone dialing up and its characteristic--- Always on-line--- attracts many people to get back on the Internet. In order to cooperate with the Executive Yuan NII ’s policy goal, that is wide band’s getting online for 3 million in three years, and to adapt to cable TV and new fixed network’s threat, China telecom in 2000 started to put forward ADSL. HiNet also overtook ISP, coming up with the wide band dialing up service. Although Cable Modem begins earlier, it is likely to meet the problem of stability and safety when the users increase. This is because the initial Cable Modem can only reach bilateral wide band and there is limitation in the bandwidth. Compared with Cable Modem, ADSL is not confined and thus its users’ number outnumbered those of Cable Modem, becoming the most common way to get on line.

(4) The Epoch of Warring States; All schools of thoughts concerned for attention:
After the widespread of ADSL ‘s service, the same business field, ISP, also put forward a competition of a whole new service stage of dialing up by wide band. The market is reformed and all the businesses start from the beginning. At this time, the business’ circumstance changes a lot. New participants try to get the place positively, posing threat to the original business. There are so many competitors, making reach the whit hot point that a series of price competitions are brought about. However, ISP isn’t able to attract long and stable clients with low price; instead, the profit becomes less. Therefore, in order to show the service’s uniqueness and to appeal to the clients with market division, ISP businesses wide band’s competition offers not only dialing up service but also all kinds of value-added wide band dialing up ones by integrating cooperative fellows. In other words, the way of appealing to clients has come from the price to content, practical application and value-added Internet service in order to make the second-round growth.

(5) Develop operating revenue, creating profits
Because of the price declining in getting online service, ISP will neither be able to increase new clients numbers nor be able to gain profit by shifting dialing-up clients to wide band clients. ISP, thus, is forced to ponder on how to gain more profits. IDC, which ISP once expected a lot, gets involved gravely in market in a short period of time, providing the market with more than it needs, and results in taking pains to carry on the business under difficult circumstances. IDC, however, has a chance due to the international terrorism and hack attack event. Quiet a lot businesses transformed into Business Continuous/Disaster Recovery (BC/DR). Previously, IDC, whose technique just started, only severed spatial renting, website substitution, host computer’s management, and some business like that. After IDC turned to BC/DR market, it provided more advanced service, including information spare, information safety, etc. Ranging from basic service to high stage BC/DR, IDC is categorized as value-added wide band practical application. It is Virtual Private Network (VPN) that can also be categorized as another value-added wide band practical application. The felicity of IP technique in net practical application makes it is easier for enterprise Intranet to integrate with Internet; the low price will attract the domestic use of medium and small enterprise. Therefore, we can foresee VPN’s continuity development in the market. Looking into the service content simultaneously, the businessmen gradually move from simply providing clients with wide-range Internet bandwidth to providing audio-visual conference, Internet teaching, long-distance management and some value-added service. It is only through hardworking of completely integrating Total Solution and high value-added service can clients be attracted and detained.

The change of ISP business management environment
(1) The opening of international sea cable and fixed network license
With the opening of international sea cable electric circuit rent application and fixed network license, ISP’s business management environment changes a little. Because of ISP’s ways of management, the renting line and the preservation cost play an vital role in the whole running cost. These ways include international sea cable private bandwidth, whole section skeleton Internet bandwidth and many clients’ getting on line bandwidth, such as PSTN’s T1/E1 PRA or ADSL’s ATM STM-1 line. Therefore, the joining of new businessman makes ISP decrease the cost in this part quite a lot; the international sea cable, especially, has considerable declining rate. What’s more, with the new businessmen’s participation, ISP has formed a new business mode, that is dialing up for free. All the clients have to do is pay the inner city’s telephone fee. They can enjoy getting online service without paying any online communication fee. In recent days, many ISPs get the income in this way, not to mention ICP.

(2) Net safety and spamming problem
When changing from narrow band to wide band dialing up, the clients’ bandwidth increases ten times. For ISP businessmen, aside from clients wide band dialing up, investment construction of skeleton net apparatus, international wide band expansion, they also come up with net safety, virus, spamming and some other annoying problems. Because the net nowadays attack mode had already developed into a stage of point-to-point attack, hacks take advantages of innocent computers as an attacking bridge to launch an attack. If the innocent client uses wide band, the damages he gets is doubled. We are heard form the ISP clients that it always makes the real victim net service disconnected. In addition, because of the widespread of wide band, virus spread faster. As far as ISP is concerned, not only these virus packages trouble the clients a lot but also client serve system becomes busy dealing with the complains because of the normal service disconnection, caused by on line bandwidth occupation
The bandwidth enables mailers to forward a grate number of spamming, which results in ISP’s occupation of bandwidth information. The waste of mail server dealing information even affects the regular mails’ sending and receiving, especially being put into the black list by the overseas mail server and the mails can’t be sent, affecting most of the clients’ rights.

(3) Free content and charged content
Initially, the ISP business offered free content and relied on net commercials as the main income. After the com depression, ISP was proved not to be able to survive in this way. One of the reason is because the initial bandwidth wasn’t enough and it was difficult to content which the clients were willing to pay for. What’s more, with greats number of free service content, free personal account, free personal website, free electric mails and free hardware room on the net, consumers have a mistaking thought that all the information on the net is free. In fact, every service is composed of many efforts, much time and money. Keeping providing free service can’t retain the customer’s loyalty; therefore, ICP turned into basic value-added free service. Charge of the value-added service gradually takes shape.
On the other aspect, ISP also finds that various value-added service contents also plays an important role in continuous growth aside from keeping rise clients’ dialing up bandwidth. These contents, especially wide band audio-visual service, CS and some value-added service, can only be provided swiftly through ICP cooperation or strategic alliance. Among these contents, ISP can offer small amount paying chance to let ICP combine clients’ fund with ISP’s bill and provides the consumers with a more convenient way to pay; offers the soft and hardware platform to attract ICP to the value-added content development. These two share the profit in the way of income.

The main points of ISP development in the future
To conclude the two chapters above, ISP has already transformed from “communication line and bandwidth sales” to “increase basic net’s additional value”. We are going to discuss main points of ISP development in the future from the following aspects.
(1) The redevelopment of ready-made net content
After successfully spurring the wide band dialing up trend, many ISP also work on the market of value-added content service, among which, such as CS, online audio-visual entertainment, online finance management and online fortune telling service, provide various of high class content service by making use of lots of clients. Take HiNet for example. The income of CS, audio-visual entertainment, finance management and fortune telling outnumber the sum of 2 million five hundred thousand in value-added content in 2002. This sum is 1.8% of the whole year income. These numbers represent that the clients have accepted charged content, that gradually familiarized with pay money online and that those using HiNet value-added service are still only a few among 3 million users. It can be imagined that content service still has a large room to develop and grow in the concealed business opportunity in the future years.

(2) Family clients’ net using
From 1993 to 1997, Intel’s Pentium CPU and Windows software operating system’s mutual promotion resulted in PC market’s high development. The personal computer generalization so far is about 50%; family use dialing up is ISP’s main business. However, with the IA increasing maturity, the apparatus in later PC age such as PDA, Digital Set-top Boxes, game set and several thriving developed range are more close to life and more entertaining than PC. Therefore, PC dialing up is no longer the only access. Yankee Group predicts that in the end of 2005, the clients who use mutual television digital machine to get online will overtake those using computer to get online. The net home appliances such as net refrigerator and audio-visual phone will become more general and make residents’ lives mush more convenient. As a result, ISP should not only help family Internet construction but also transform the inner net into more perfect net construction.

(3) Assistance on enterprise’s modernized perpetual management
According to the enterprise’s need, ISP is supposed to provide carious kinds of modernized service, such as visual conference, net teaching and far-distance management, complete B2C electric commercial affair system and some value-added service application. What’s more, enterprise and residents’ use of net platform on dealing with matters will save human efforts and provide more business opportunities. ISP should help enterprise enhance the strength of competing with its professional experience.
IDC states the global enterprises’ online learning market will rise from US $660 million in 2002 to US $2370 million; the growth rate is over 3 times of it. This shows the inner enrichment is enterprise’s big goal. ISP should provide fine software and hardware in the value-added service aspect helping the enterprise grow and develop perpetually.

(4) ISP alliances with others, carrying out the theory “three heads are bigger than one”
Strategic alliance or buying together will be the most effective way if ISP wants to get the market chance or enforce the competitive power. Among them, the most famous example is AOL (American On Line). AOL invests digital mutual television system service of TiVo in July 1999 and gets into the field of mutual television service, integrating the biggest entertainment media company, Walt Disney in January 2000. AOL provides online service by Walt Disney’s cable system wide band technique, and enforces ISP’s weak part --- content service--- raising its competitive power in the media.
Besides, ISP’s strategic alliance with entrance website, anti-virus software businessmen, audio-visual content service is also a well-known example. For example, America Yahoo’s cooperation with SBC provides ADSL with sales promotion project. These successful examples reveal ISP, in addition to basic bandwidth service supply, should cooperate with other business fields and make the service range versatile.
Strategic alliances are new net industry such as Yahoo and Orange; besides traditional industry is also emphasizing alliance target. How to integrate the traditional industry’s production service and ISP information access with entrance net commercial and to make money trend, production trend, information trend, business trend is also one of the main points in strategic alliance.
(5) Network safety’s enforcement and business opportunity
As the former chapter mentioned, with continuous network attack, personal and enterprise’s complicated condition, ISP faces not only the hack invasion threat but also electric trading missing and enterprise’s bad handle information crisis. Even worse, a huge damage will be done. According
to Computer Economics Security Review 2002, 2001 CodeRed and Nimda virus is estimated to have wasted US $3260 million worldwide. ISP should take positive enforcing measurement in inner network safety. For example, lowering the clients’ loss by malicious attack disconnection; offering the enterprise clients well-formed safety construction (such as IP-VPN) and having sufficient network knowledge play a role of enterprise information safety.
The network intellectual property rights belong to one part of network safety. Under the Internet wide spread, the intellectual property rights are severely threatened; mp3’s randomly transmitting for instance. ISP has limitation on the controlling aspect. The pessimistic way is to enforce on content service management; optimistic one is to alliance with content service businessmen, provide legal service and create more business opportunities.
(6) The enhance on network quality
Network quality’s quarantine issue emerges as the clients’ dialing up bandwidth problem is solved. With the bandwidth increase and the progress made in compressor technique, the immediate media transmitting, such as visual conference, net phone, random selective visual aids and several new network applications, works. These applications acquire not only bandwidth but also network quality quarantine such as slow delay, loss, etc. For ISP, it is also one of the vital network value-added services. Besides the leveled service, which may bring about the new income for ISP, these applications can also manage the network information more effectively.
With the wide-range use of Internet, another issue coming up is the fail of IP address and the original IP’s insufficient function. The new generation network technique--- IP v6--- puts emphasis on large address room, higher efficiency, network quality quarantine, IP security and good integration with automatic mobile functions. Every nation gets involved in the investigation and the development one by one. As an ISP businessman, one should take notice of the situation and join it in the right time.
(7) Maturity on getting online and its diversity
The ready ADSL、Cable Modem wide band technique are likely to move toward VDSL、Ethernet in first miles way. There are HomePlug、HomePNA、Fast Ethernet、Giga Ethernet techniques in section network. With so many choices, ISP is sure to meet the problem on cost application and bandwidth consideration in the future when ISP puts forward more network techniques. In this way, ISP needs a well-formed plan in promotion of network technique in the future.
Furthermore, form 2001, the development of Wireless LAN (WLAN) spread out in the whole world, providing boundless and convenient transmission. Although ISP can’t get the cost back by providing Hot-spot service, the need in cable saving and reading growth is still positive in the long term after the WLAN information transmission safety and enhancement of transmission speed problems are solved.

Conclusion
Wide band connecting service had taken the place of dialing up and thus become the basic service. After the basic service’s generalization reach certain rate, the growth need will become slow gradually. When the rate tends to decline in a long term, the businessmen have to ponder on how to take care of the price strategy and long-term profits and make the business management perpetual. Among them, the thriving value-added service is an obvious direction. However, the businessmen should first ponder on the advantages themselves and search the market position again. Those marketers who have most family clients can use the basic clients’ mutual mode “Fish and water exists together” to alliance with other business. They develop the creativity to the most; keeping trying new provided value-added content service, putting the wide band application into families and bringing up another growing chance.
As for those positioned by few quantity high price clients market, they can make full use of network and IT technique experience that ISP service accumulates. Their positively transforming the offering enterprise service to establish stable clients’ loyalty can also bring about stable growth income.