Interactive Week - September 26, 2000

Regional ISPs Score Big

By Rebecca Wetzel Special To Inter@ctive Week

Pundits for years have predicted the demise of regional Internet service providers in favor of a handful of national behemoths. But, with a nod to Mark Twain, rumors of the death of the regional ISP are greatly exaggerated.

Though big service providers such as Verio have become national players by buying countless regional ISPs, one-third of the respondents to the annual Inter@active Week ISP customer survey say they still rely on regional providers for their primary business connections.

The reason, according to Hilary Mine at Probe Research, is customer service.

"In general, small and regional ISPs are doing well with small-business customers and branches of large businesses, based on providing superior customer care," she says. "This means providing a combination of greater responsiveness and generally higher 'touch' than their larger competitors."

Our recently gathered survey results support the hypothesis that superior customer care is key to the survival of regional ISPs. When we aggregated responses for all of the non-incumbent local exchange carrier (ILEC) regional ISPs, we found customers of regional ISPs quite satisfied with the customer service responsiveness they experience.

Regional ISPs rank fourth in satisfaction with customer service responsiveness in a field of 20 national and ILEC ISPs. On a scale of 1-to-5 with 5 being extremely satisfied, the regional ISPs received a mean satisfaction rating of 3.58. Only MindSpring, with a mean score of 3.94;EarthLink, at 3.85; and PSINet, at 3.71, performed better than the regional carriers.

Regional ISPs also excel at getting service up and running efficiently, respondents say. Only EarthLink and MindSpring received higher satisfaction ratings. Regional ISPs received a mean satisfaction rating of 3.89 for time to get service established, compared with 4.19 for EarthLink and 3.94 for MindSpring.

In value for price and network reliability - both attributes dear to users - regional ISPs also received high marks. Value for price is second only to network reliability in importance in choosing an ISP, and regional ISPs rated fifth in this attribute, with a mean satisfaction rating of 3.78. EarthLink leads in customer satisfaction with value for price, with a rating of 3.9; followed by MindSpring at 3.86; The Microsoft Network with 3.82; and Pacific Bell at 3.81.

Web hosting is another category in which regional ISPs do well. Regional ISP customers are more satisfied with the Web hosting services they receive than are customers of all but two ISPs rated in the survey - MindSpring and Southwestern Bell. Given this high satisfaction rating, it is not surprising that a comparatively high percentage of regional ISPs' customers - 38 percent - use their access ISP for Web hosting. Only Verio, at 60 percent; Concentric Network at 43 percent; and MindSpring at 39 percent have higher percentages of customers buying Web hosting and access services from them.

Predictably, regional ISPs rate poorly in two attributes - network reach, and brand awareness. By definition, a regional ISP lacks expansive network reach, because by expanding its reach it would outgrow its regional status. As for brand awareness, most regional ISPs lack the deep pockets required to build it. Nor do they necessarily need it, given that brand awareness ranks last in importance to customers.

So what is the long-term fate of the regional ISP, and what might be seen in next year's survey? Mine is optimistic. "I have long been firmly of the opinion that the prognosis for small ISPs is much like that for small service providers of other types - excellent. They are not going away and, indeed, many are profitable and will continue to prosper for years to come."

The annual Inter@ctive Week ISP survey took place from July 19 to Aug. 7. A total of 40,204 e-mail messages were sent to Inter@ctive Week subscribers, and data from the 3,291 completed online questionnaires was collected and tabulated by The full report on the survey appeared Sept. 18.

The questionnaire asked respondents to rate what service criteria are most important to them. Then respondents rated how well their primary Internet service provider performed in those areas. While dozens of ISPs were rated, most were not included in the survey's results, because those rated by fewer than 40 respondents were considered to have a sample size too small to be statistically significant.

Customer satisfaction scores were calculated for each ISP rated by 40 or more respondents. These scores constituted a "grade" that combined the weighted importance of each attribute with performance against that attribute.