Interactive Week - May 7, 1998

Service Level Agreements Key Feature For ISPs

By Rebecca Wetzel and Ruth Chatterton, Special To Inter@ctive Week

Despite an avalanche of consolidation, Internet service providers are still a dime a dozen. The trick for dial-up customers of Internet and virtual private network services is to find a provider that offers reliable service and doesn't skimp on technical support.

But how can you separate hyperbole from true quality before you sign on the dotted line? One way is by looking at the service levels that an ISP will guarantee.

Many business customers are demanding and receiving service level agreements (SLAs) from their ISPs. In these agreements, an ISP signs up to provide a specified level of performance. If this performance level is not met, the provider is penalized. If the performance is exceeded, the ISP may actually receive a bonus.

In TeleChoice Inc.'s ( 1997 Internet Service Provider Study, 33 percent of business users reported receiving guarantees for Internet access today. Business customers use SLAs as a proxy for a measure of service quality when choosing an ISP. If an ISP is unwilling to contractually commit to a service level, it can mean one of three things.

First, it could mean the provider is unsure about the level of service its network offers and therefore doesn't want the world to know that it might not measure up.

Second, it may be that the service-level metric is difficult and/or impractical to measure.

Customers that want quality service should avoid ISPs in either of those two circumstances. ISPs need to be prepared to work with customers to develop metrics that can be measured in valid and reliable ways. At the same time, customers have to understand that guaranteed service is not the lowest-priced option. There is cost associated with testing and validating service levels.

In a recent study sponsored by network testing equipment vendor Midnight Networks (, TeleChoice asked Internet business customers what SLAs they receive today and what guarantees they would like to receive. Customers also were asked which SLAs they are willing to pay a premium for, and how much of a premium they are willing to pay.

Today's Story

Of the dial-up SLAs most common today, availability reigns supreme. Of the respondents indicating that they currently receive SLAs, 51 percent say they receive guarantees for service availability. The next most widely received SLA covers the time it takes to resolve problems.

A small number of customers report receiving service agreements for throughput, security and Web site performance.

Most of the survey respondents buy dial-up service from small ISPs, with America Online Inc. ( customers the largest group of any one ISP.

Many small ISPs offer service agreements, and AOL offers them on its recently announced virtual private network (VPN) service.

Of the larger ISPs, such as AT&T WorldNet (, Digex Inc. (, GTE Internetworking (, MCI Communications Corp. (, Sprint Corp. ( and UUnet Technologies Inc. (, most offer at least one type of performance guarantee -- usually for availability.

We asked respondents to rate the importance of six performance metrics in selecting a dial-up ISP. The performance metrics included:

Availability -- Remote access server accessibility without busy signals

Dropped connections

Latency -- The time between request and first response from a remote computer

Throughput -- The length of time it takes to transfer a file

Time to log on -- Connection establishment speed

Modem speed -- Connection at the maximum speed your modem handles.

Respondents were almost unanimous in their desire for availability agreements. Ninety-four percent of the customers surveyed consider an SLA governing availability very important or critical in choosing an ISP. The reason for this is simple: If business users can't access the service, they are dead in the water. For this reason, many ISPs catering to businesses offer availability guarantees.

No Drops Please

Next in order of importance to business customers is a guarantee against dropped connections, with 91 percent listing it as critical or very important. No ISP that we know of offers SLAs covering dropped connections. Dropped connections are hard to measure and are not necessarily the ISP's fault. But if ISPs could offer SLAs covering dropped connections, it would win them customers eager for this guarantee.

Modem connection speed and throughput follow in order of priority. ISPs and VPN providers are very quick to argue that they have no control over connection speed and that it's a function of the quality of the local exchange carrier's network.

Latency and time to log on are cited as least important in the eyes of respondents. It is interesting to note that although latency ranks fifth in overall criticality to ISP customers, it is the second most common SLA among those service providers that offer VPN services. Latency guarantees for dedicated connections are offered because latency is practical, although not always easy, to measure.

Second, both latency and its cousin, jitter, are critical measurements if you expect to put voice and video over VPNs. You must have low and predictable latency if you expect to use your VPN for these services.

If customers had a choice, they would receive SLAs covering dropped connections E H and modem connection speed over latency guarantees.

Using performance measuring services from the likes of Inverse Network Technology Inc. ( and Keynote Systems Inc. (, or products such as Midnight Networks' Avalanche/RA, it is becoming more and more feasible for ISPs to measure dropped connections and modem connection speed as well as latency and availability. Measurement of these performance characteristics is the first step to offering service level guarantees.

Businesses that need SLAs for dial-up service are generally willing to pay for them. Eighty-five percent of respondents indicate a willingness to pay more for at least one guarantee covering Internet access. Of this 85 percent, an impressive 72 percent say they are willing to pay premiums of 10 percent or higher for SLAs covering at least one aspect of service.

Internet service customers are most willing to pay premiums for SLAs covering availability, guarantees against dropped connections, modem connection speed guarantees and guaranteed throughput. Forty-five percent of customers surveyed indicate they are willing to pay premiums of 10 percent or more for availability SLAs, with an additional 32 percent willing to pay a premium of up to 9 percent.

Customers indicate a similar willingness to pay for guarantees covering dropped connections and modem connection speed. Though people are now less willing to pay premiums for latency, TeleChoice expects this to change as more delay-sensitive applications, such as voice and video, are transitioned to VPNs. Even with guarantee premiums, business customers will see big savings and efficiencies from combining separate data, video and voice networks.

As businesses increasingly depend upon the Internet and Internet-based VPNs for revenue generation and cost reduction, the cry for SLAs covering multiple aspects of service will become louder. Smart ISPs will listen and act.

Expect to see SLAs used as an increasingly important competitive service differentiator among ISPs. Also, expect to see ISPs hold their own feet to the fire in honoring these agreements, rather than simply waiting for customers to complain before taking action. It will take some time for all of this to happen because of the technical issues as well as the business issues involved. It can get expensive if an ISP is unable to honor its SLAs, so a provider cannot enter lightly into SLAs that have teeth. But despite a wait, TeleChoice predicts that customers will get their way in the end, and SLAs will come into their own.

Rebecca Wetzel is director of Internet consulting at TeleChoice. Ruth Chatterton is an Internet consultant at TeleChoice Inc. (