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How to Start an Internet Service Provider Business

Do you want to start an internet service provider business? If YES, here is a complete guide to starting an ISP company with NO money and no experience plus a sample internet service provider business plan template.

The Internet is now that base on which human activities are built on, and you can’t connect your home or workplace to the Internet without an Internet Service Provider. An Internet service provider serves as a contact point between a customer/user and the Internet.

Have it in mind that that an ISP is a user’s first point of outside contact when they leave their home or office, in order to connect to the Internet.

An Internet service provider can support users, provide DNS services, process e-mail, route information and provide security. The most important feature of an ISP from the user’s perspective, is bandwidth for upload or download operations.

What Does It Take to Start an Internet Service Provider Business?

Starting this business won’t be a simple task; it will take proper arrangements and understanding of your envisaged target market and the internet industry. The market for this business is huge but the first point of starting this business will be to write a business plan. You have to research and mould your business plan for the type of ISP you want to have.

Note that you must have a financial document spelling out how much you can spend, where and how. You must have a marketing plan to acquire customers. You also have to understand that the Internet runs on servers. We suggest you get servers that are UNIX-based. You can get Sun Internets that will act as Web servers, Mail account servers, DNS servers and news servers.

You may need to get multiple servers to get started and to handle the traffic. You will also need a communication server that will operate as a carrier-grade common platform, moving traffic in and out for a wide range of communications applications.

You will also need routers as they move traffic between networks. Without a router, you cannot send any traffic to remote locations. Cisco makes industry standard routers that will allow users to have access to the Internet.

You will also have to choose an upstream provider that is nearby. An upstream provider is a communications company that can take your traffic and redirect it. Look at Sprint or MCI. These providers will allow you to access the bandwidth that you need for your clients.

You also have to get phone lines, and the ratio is one phone line and modem for every five customers. Order the phone lines in batches of 20. This will reduce your costs and allow new customers to sign up without delay. Starting and running this business is a challenging task. You need funding, a good working plan and a lot of equipment. You will also work long hours.

Steps to Starting an Internet Service Provider Business

1. Understand the Industry

With the advent of technology and Internet, the Global Internet Service Providers industry is enviably one of the fastest-growing industries in the global economy.

This massive growth is being gingered on by quick advancements in internet-related infrastructure and services, as the emergence of a plethora of powerful personal and business internet applications has changed how businesses and consumers function.

We believe that this rising demand for broadband internet access and continued investment in wired internet infrastructure have helped move the industry forward. Experts believe that broadband subscribership will continue to move the industry forward the next five years, as more households and businesses buy or upgrade internet services for easy access to industry products.

Reports have shown that the Global Internet Service Providers industry is dependent on extensive network infrastructure in the delivery of its core product, internet access. We believe that this industry is characterized by short product and technology life cycles. Note that success in this industry solely rests on an ISP’s ability to keep up with latest technological developments.

We noted that Internet service providers are rolling out improved fibre networks and upgrading existing cable and copper networks to increase downlink speeds. Note that the steady upgrades and extension of existing networks brings about a substantial capital expense, which is reflected by high depreciation expenses.

In the united states, this industry has a medium level of concentration. Reports have shown that it is characterized by a dominant group of larger players and numerous small players.

We believe that these small players are mostly regional companies and business-to-business operations that offer back-end capacity to larger players. Note that the top four industry participants account for 78.7% of industry revenue in 2017.

Experts believe that government regulation has withheld any single telecommunications provider from becoming too dominant. The internet has rapidly developed a universal presence over the past several years, which has significantly aided the Internet Service Providers industry in the United States.

Have it in mind that recent regulatory overhaul is expected to drive government-subsidized network expansion and grow the number of US broadband connections, further affecting industry revenue growth positively. Experts believe that a push toward broadband expansion in rural markets, as well as a rise in demand from the business segment, will boost industry revenue.

2. Conduct Market Research and Feasibility Studies

  • Demographics and Psychographics

When planning to start this business, you need to understand that there are different aspects to Internet service provision. While there is scope for the entry of more big players in the market, there are also opportunities for smaller service providers to enter the fray.

Immediately you have noted a need in the market, it is time to carry out comprehensive market research and make sure that there is sufficient interest in your service, and that you will be able to provide it profitably.

Apart from the access from home, school, and the workplace, Internet access may be available from public places such as libraries and Internet cafes, where Internets with Internet connections are available. Some libraries provide stations for physically connecting users’ laptops to local area networks (LANs).

Also Internet access points are available in public places such as airport halls, in some cases just for brief use while standing. Some access points may also provide coin-operated Internets.

Also note that coffee shops, shopping malls, and other venues increasingly offer wireless access to Internet networks, referred to as hotspots, for users who bring their own wireless-enabled devices such as a laptop or PDA. These services may be free to all, free to customers only, or fee-based. All these goes to show or prove the point that the market in this business is endless and very vast.

3. Decide Which Niche to Concentrate On

We believe that in terms of scope for development, the Internet Service Provider environment globally is practically still in its infancy and there are numerous opportunities for new entrants to carve a niche and be competitive. Especially in the more established Internet service provider markets across the world, new entrants are mushrooming.

This has created a market that is hungry for alternatives and competition, opening the door for new players. To be able to stay relevant in this industry, you have to research and pick a niche that will give you the timely focus and leverage you need to achieve success. Niches in this industry may include…

  • Providing wired broadband internet access
  • Providing wired narrowband internet access
  • Providing internet backbone and carrier services
  • Hardware and software consulting
  • Web hosting etc.
The Level of Competition in the Industry

Reports have it that about 2 billion people use the Internet worldwide; countries with the most Internet users include China, the US, india and Japan. The Asia/Pacific region leads the world in broadband deployment, followed by North America and Western Europe.

You need to understand that Internet access operations of telecommunications carriers are included in the industry, as are resellers of Internet access over telecommunications networks. We believe that demand in this industry is driven by consumer and business requirements for information.

But have it in mind that the profitability of individual companies depends on efficient operations and good marketing. Large companies in this industry have economies of scale in operations, purchasing, and marketing. While small ones can compete successfully by operating in underserved markets or excelling in customer service. The key services in this industry are Internet access, website design and hosting, and technical support services.

4. Know Your Major Competitors in the Industry

  • AT&T
  • Comcast
  • Verizon
  • Nippon Telegraph
  • Telephone Corporation
  • Telecom Italia
  • Telefónica
Economic Analysis

To start and run a successful Internet service provider business, you have to focus on providing a consistent and high quality service to your customers as well as delivering a good return on investment for your shareholders.

We believe that Internet service provider businesses are the original internet company in as much as their services are vividly necessary for the internet to reach the critical mass of users to make it the ubiquitous and ever growing phenomenon it has since become.

Research has shown that early ISPs lacked any prior Business model upon which to base their services, which is why they borrowed freely from the business models (and services) of existing communication service providers such as the telephony companies.

We believe that this same pattern of talent and business model migration was also evident in the transition from telegraphy to telephony services in the previous era.

But in this new age, ISPs have largely gone past the transition phase, and are now faced with the daunting task of defining their own future, and relevance, to a more sophisticated communication technology user base. It’s important to state that the phenomenal growth of internet access is affected only by the fact that there is a finite amount of people on the planet.

Experts believe that once 50 per cent or more of the populace gets connected, in any market, the potential customer pool will start to shrink, therefore individual ISPs are left to fight amongst themselves for the remainder, and for each other’s customers.

It is believed that the direct consequence is sharply increased competition among ISPs, which is only exacerbated by new market entrants, with innovative and often disruptive business models.

5. Decide Whether to Buy a Franchise or Start from Scratch

Reports have shown that Internet service providers all over the world are faced with added competition from mobile internet services. Such services, which are mostly based on 3G wideband connectivity, allows users to access the internet on the move, even at home.

We believe that this development has the potential to render traditional fixed line ISP obsolete unless they can maintain their lead in offering even faster connectivity via developments like fibre to the home (FTTH). Buying into a franchise in this industry is better than starting from the scratch because unlike starting from the scratch, buying into a franchise offers you the following benefits;

  • A better business platform
  • Easy access
  • VOIP Unified Telephony
  • Security
  • Integrated applications
  • Flexible and scalable

6. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)

Indeed there are numerous legal structures to choose from (sole proprietor, LLC, Incorporation, etc.), so you’ll need to do a little research and see which model is right for the services and products you intend to offer.

But when planning extensively for this stage, we suggest that you consider all possible options, your plans for the business, and how best any structure would suit you. The legal entity you decide will rely on the size of your Internet service provider business, but for the sake of this article the LLC is the best entity for an Internet service provider business.

The benefits of forming an LLC business structure is well known to the world, but the reason why it is the best structure for an Internet service provider business is because it provides security, flexibility and credibility.

7. Choose a Catchy Business Name

  • Shred business Corporation
  • Airfire Communications
  • Tribune Internets
  • Darkage Internets
  • Fundit network solutions
  • Favour connection Inc.
  • Antique corp
  • Space Inc.
  • Access Internets
  • XYZ electronics
  • Deltasone LLC

8. Discuss with an Agent to Know the Best Insurance Policies for You

You have to understand that running an internet service provider business can put you at risk. You will definitely have access to other companies’ sensitive data. Although you’re operating on a web-based system, the laws of copyright, libel, slander and trademark still exist.

Like all those providing professional services, internet service providers provide a service that comes with an expectation of a certain level of professionalism and specialist knowledge. We believe that when things go wrong the internet service provider may well be held accountable for any financial losses and internet service providers insurance is designed to mitigate the effects of such actions.

  • General Liability Insurance.
  • E&O Insurance.
  • Cyber Liability Insurance (Data Breach Insurance).
  • Business Owner’s Policy.
  • Workers’ Compensation Insurance.
  • Employer’s Liability Insurance.
  • Fidelity Bond Insurance.
  • Employment Practices Liability Insurance.

9. Protect your Intellectual Property With Trademark, Copyrights, Patents

Experts know that handing data or rather the internet over to a third-party is always risky, but Internet service providers create unique concerns for IP. Protecting your intellectual properties can be stressful but in the modern world where ideas and patents are been stolen on daily basis, you need to consider protecting your hard earned intellectual property rights.

  • Secure it yourself
  • Prevent a lockout
  • Revisit control on daily basis
  • Pick a right provider
  • Select the right service
  • Read and understand your fine prints
  • Expect to pay more
  • Consider IP creation

10. Get the Necessary Professional Certification

Have it in mind that professional certification measures your knowledge and skills against industry and vendor-specific benchmarks to prove to customers that you have the right mix of Internet skills, knowledge, and expertise. Professional certification in the Internet service provider business includes;

  • CCIE: Cisco Certified Internetwork Expert.
  • CCNP: Cisco Certified Network Professional.
  • JNCIE-ENT: Juniper Networks Certified Enterprise Routing and Switching Expert.
  • CompTIA Network+
  • WCNA: Wireshark Certified Network Analyst.

11. Get the Necessary Legal Documents You Need to Operate

Every legal document needed for business takes time, energy and paperwork for you to be able to obtain them properly. But even as unpleasant a task as it may be, don’t risk your business shutting down before it fully begins. Conducting business without the proper licensing is a criminal offense in some states, while others hand out hefty fines. Here are some legal documents needed for an Internet service provider business;

  • Business license
  • Insurance
  • VAT registration
  • Employment agreement
  • Federal tax identification number

12. Raise the Needed Startup Capital

Starting and running your Internet service provider business doesn’t come cheap. It requires adequate funding to be able to push through in this industry. Well fortunately, there are a lot of financing options out there for focused entrepreneurs.

There are banks, private investments, and even funding from wealthy individuals who want to help small business owners to become successful. But of course, you can’t just borrow money as easy like that. You have to prove to these people that the business you’re making has a potential to give them significant return. Ways to gain funds in this business may include…

  • Personal savings
  • Service charge
  • Pitching
  • angel investors
  • Partnership
  • Venture Capitals
  • Loans and grants
  • Alternative funding source like Crowdfunding

13. Choose a Suitable Location for your Business

Indeed an excellent location for your business is very crucial to the success of your Internet service provider business, but choosing the right one can be something of a balancing act. Ideally, the location should be convenient for your customers and employees – without being too expensive.

There are a lot of factors you should consider when deciding on a suitable location for your business, but any option you go for, there are likely to be advantages and disadvantages to the business location. An office in a rural setting might be relaxing, but could be awkward for staff or suppliers making deliveries.

Being right in the middle of the city could be very convenient, but might also be expensive. Location has a major impact on cost. If you need premises in a prime location, the extra costs may be justified. Factors to consider may include…

  • Planning restrictions
  • Local council charges and business rates for services such as waste collection
  • Local amenities
  • The level of passing trade
  • The number of competitors
  • Transport links and parking

14. Hire Employees for your Technical and Manpower Needs

For you to provide your customers with the service they need, note that you need to have the right tools and equipment. But these days, it’s not enough that you just get what’s available out there – you’ll need to get the latest technology as people are always looking for the new and fastest service.

Have it in mind that getting the latest technology will help you make your company work. Also consider investing in high quality gadgets, such as Internets, laptops, and telephones so your staff will become more equipped to do their jobs.

Also to be able to make it easy and fast for your customers to subscribe, you need to hire staff. You don’t have to just hire anyone, you have to hire the right people. A company with rude and slow staff is likely to lose customers. In this age, customers are the power of a business and they will definitely want a fast and reliable service, so fulfill every order as fast as you possibly can.

Security should also be your top priority especially since these people will give you their personal data when subscribing.

Note that it’s your responsibility to assure and prove to them that all the details they share are safe. Also consider hiring other professionals, such as a payroll service experts to ensure that your staff are properly compensated, and lawyers to help you in all legal matters. Equipment you might need to buy may include…

  • UPS units
  • A diesel power generator
  • HVAC units
  • Servers
  • Routers
  • Switches
  • Computers Etc.
The Service Delivery Process of the Business

Internet services typically provided by an Internet service provider business include Internet access, Internet transit, domain name registration, web hosting, Usenet service and collocation.

They may also engage in peering, where multiple ISPs interconnect at peering points or Internet exchange points (IXs), allowing routing of data between each network, without charging one another for the data transmitted, data that would otherwise have passed through a third upstream ISP, incurring charges from the upstream ISP.

We strongly believe that network hardware, software and specifications, as well as the expertise of network management personnel are very crucial in making sure that data follows the most efficient route, and upstream connections work reliably.

Internet service providers as the name implies provide Internet access, employing a range of technologies to connect users to their network. Have it in mind that available technologies have ranged from Internet modems with acoustic couplers to telephone lines, to television cable (CATV), Wi-Fi, and fibre optics.

But then for users and small businesses, traditional options include copper wires to provide dial-up, DSL, typically asymmetric digital subscriber line (ADSL), cable modem or Integrated Services Digital Network (ISDN) (typically basic rate interface).

But business customers with more demanding requirements (such as medium-to-large businesses, or other ISPs) can use higher-speed DSL (such as single-pair high-speed digital subscriber line), Ethernet, metropolitan Ethernet, gigabit Ethernet, Frame Relay, ISDN Primary Rate Interface, ATM (Asynchronous Transfer Mode) and synchronous optical networking (SONET).

15. Write a Marketing Plan Packed with ideas & Strategies

Indeed an Internet service provider provides access to the Internet for its customers in exchange for a monthly or annual fee. When customers subscribe, they receive a username and password for logging onto the Internet as well as several, often customizable, email accounts.

Note that business customers enjoy faster access speeds, higher security and more email accounts than residential customers. Marketing this business might seem easy but it still needs careful consideration.

  • Word of mouth Program

We suggest you send your current subscribers a bi-monthly or monthly newsletter featuring referral and bonus program details. Also try to offer one month of free service to customers who refer someone new to your business.

For instance, to gain the free month, the customer must refer someone who signs a six-month or one-year contract. We advise that you create the program with a tiered structure wherein if a customer refers 10 or more new subscribers in an allotted time frame, he receives six months of free service.

  • Join the Chamber of Commerce

We also advice that you join your local chamber of commerce and get to associate with other business owners in your area. Also try to attend social and networking events sponsored by the chamber and offer service discounts to fellow members. We believe that individuals like to meet those with whom they might do business in person.

  • Partner with Internet Clubs

We also advice that you partner up with Internet clubs at local community colleges and universities. You should offer to help them with projects and teach them about emerging technologies. Give tours to elementary schools and high schools with information technology departments.

Show the students how you keep clients’ data and Internets secure, how to speed up connections, the difference between business class and residential class subscriptions, etc.

  • Organize Free Courses or Seminars

You should also organize free classes or seminars at your business for those interested in learning more about technology. We suggest that some of the classes be geared towards residential customers while others could address the specific needs of business customers.

Start by teaching them about virus protection, spam filters, firewalls, and spyware detection and removal through seminars or mini-classes. Participants will notice your expertise in the field, which builds trust and respect.

  • Take the initiative

We believe that the most difficult and daunting point to consider, not least because of the uncertainty accompanied with predictions about the internet and consumer behaviour, is that it would be prudent for you to be more proactive in offering even more customer-pleasing, and regulator-friendly, propositions/business models, on their own terms, instead of being forced into it.

  • Try not to alienate or irritate the customer

Indeed it would be far less painful to include customers in decision making, (e.g. via opt-in schemes for ad-supported models), than to end up losing market share and/or possible vilification for invasion of privacy.

  • Avoid excessive pressures from content industries

No doubt, they all need Internet service providers as much as ISPs need them (perhaps even more so). Even though the content industry may threaten all manner of retribution (e.g. via governmental and regulatory intervention, or by setting up their own content delivery networks), but the fact remains that consumers will always need access to the internet, and to content, hence protecting the customer relationship must count in favour of the ISP.

16. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity

You can use several different strategies to boost brand awareness and retain loyal customers for months and years to come. Have it in mind that brand awareness and increasing customer loyalty is an ongoing project and you can choose several strategies that will help you generate the strong customer base your business needs.

From staying active on social media sites to simplifying the buying process, implement some proven strategies to develop brand affinity for your business. Other strategies may include…

  • Make it easy for customers to buy from you.
  • Stay active on social media.
  • Be transparent.
  • Stay in touch.
  • Deliver outstanding customer service.