The market of providing access to the Internet is undergoing a resounding upheaval at the moment, both in terms of who provides access and how those who provide that access earn a living. Unexpected players are providing access for free because they have something else to sell through that access. In the following extract from a much longer interview with Jean-Charles Cartier, founder and director of Span, an ISP that is now part of the Cable and Wireless Group, we discuss his vision of the future of Internet Service Providers (ISPs).
From tubes to services - the future of ISPs
Internet Services providers cannot continue as they are currently doing, given the free access model. What will their future business model be?
The answer we give to that is Application Service Provider. In other words "add value to the tube". The question is "What should we add to seduce, secure and conserve customers on along term basis?"
In becoming part of a larger group like Cable and Wireless, how do you keep on the one-to-one relationship of a local ISP?
For the business customer, that one-to-one relationship will continue to exist. It is inevitable, and the larger the business customer, the more personalised the relationship has to be. Our major target is the small and medium sized enterprises (SMEs). For the dialup customer, Internet access will become more anonymous, like a commodity product. Going after the residential customer is not the line of business of C and W.
You say your customer is the smaller company. How do you see providing applications to that smaller customer?
My personal view is that every company has to handle activities not related to its core business, like travelling, recruitment, accounting, ...So for me, application service provision involves offering those SMEs access to the activities which are not their core business but which are common to many businesses. For example, finding sales people or organising interviews or outsourcing accounting. We have made a list of two A4 pages of such applications.
When you talk of applications that makes one think of technology, whereas you don't seem to be approaching the question from a technological stand point.
My interpretation of this next step for ISPs is to ease the life of the customer by using the network as much as possible. That can start with back office applications, where we offer farming to host those applications so that companies have access to the servers as if they were their own. The two main areas there are the remote Local Area Network (LAN) and the remote PBX, offering SMEs a saving on their current infrastructure. It is difficult for them to find the specialised LAN managers.
When you list services, they are very clearly business oriented. When you give an example, you give a technological example.
There are two separate aspects: the first part of my answer was the syndicated services and the second part was the real applications.
If you want to provide syndicated services, you also need web-based applications.
Let's take the example of employment. Finding the right people for a company is not an easy thing to do. By making global agreements with companies like ADECO, it is possible to move towards solving this problem. That in turn has an impact on ADECO's business.
Can ISPs become hubs so that companies like ADECO or a bank or an insurance company will be interested enough to link in to the ISPs' customers?
"Hub" is the right name of the game. The aim is to seduce the companies that can provide those services. Our core business is to offer access. As the value of access is dropping tremendously, we need to find other sources of revenue.
But in such a syndicated model, you are still providing access. You are providing ADECO access to a large number of small companies.
The access business still has a lot of value because it is the necessary infrastructure for the new economy to develop. However, new technological tricks allow ever more people to be present on the same sized line.
We talked about playing the role of a hub. The major question, seeing the way the market is developing, is whether it will be ISPs or other players who will fill that role.
It could be a magazine. It could be a search engine. It could be what used to be called portals. It could be business to business sites. Honestly though, if ISPs don't do it, I can't see how they will make a decent living in the future. The connectivity side has become a commodity product. In order to sustain the growth with eighty to a hundred people companies, we need to address a lot more customers.
What you are saying is that, whatever happens, your business is still about selling pipes.
And all this business about syndication has to do with selling more pipes?
Not only selling pipes, but also adding value to the pipe. The basis for the connectivity is the connection. So a company choosing to work with Cable and Wireless (CW), for example, would want to have secured pipes, guaranteed access, etc...Once that is OK, the question is "What else can be offered?" It is more than probable that companies like CW and its competitors will have to sign deals companies like IBM, Dell, Compaq, because those companies have exactly the same problem from a different angle. They are faced with dropping prices in their core business so they are obliged to offer more services to their customers. We can certainly combine marketing forces with companies like that.
Jean Charles Cartier, Cable and Wireless
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