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How to become an ISP


How many phone lines are needed?

Where do I get my IP addresses and how much do they cost?

What will the lines cost?

What about satellite?

Is wireless a viable strategy?

What kind of router will I use?

What is the bare minimum I can start with?

What about Frame Relay and DSL for the backbone?



How many phone lines are needed?

You will need one line for each subscriber on-line simultaneously. For example, a small ISP with 96 phone lines can typically sell eight subscriptions for every phone line (an 8:1 ratio), thus serving about 768 subscribers. An 8:1 ratio means that one out of every eight subscribers is expected to be on-line at any given time. With digital lines, you will order blocks of 24 (T1 or PRI in North America) or 30 (E1 or PRI in Europe and elsewhere). ISP Ltd. will help you determine the proper number of lines for your projected subscriber base.

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Where do I get my IP addresses and how much do they cost?

Your IP addresses come from the backbone provider (unless you are a large ISP, in which case you wouldn't be reading this). In most countries, the addresses have no additional cost over your backbone connection.

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What will the lines cost?

In the USA and Canada, the cost of a T1 wire from your telephone company will run $700 to $1,500 per month. For the backbone (Internet) connection, you will further need that T1 line to run to your backbone provider, which will cost an additional $500 to $2,000 per month. ISP Ltd. will assist you in obtaining these lines.

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What about satellite?

Satellite may be a good choice for areas where there is no other high-speed service, but the cost is generally much higher in North America than wired service. In Africa, satellite is often the less expensive choice with the exception of the cost of the Earth Station. Dedicated two-way satellite service runs from around $3,500/month for 128kbps to over $10,000/month for 512kbps. Typically you will need to pay for the first 3 months in advance along with some setup fees. Satellite equipment (the Earth Station) costs around $30,000 to over $60,000 to purchase.

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Is wireless a viable strategy?

An ISP that implements a wireless network has a chance to own their own infrastructure, which is virtually impossible in the wired networking arena. As you can probably imagine, placing your ISP on an equal level with the telco has tremendous potential and advantages. In addition to owning your infrastructure, going with wireless provides the opportunity to offer broadband access with the limitations and requirements of such technologies as xDSL. Most often, wireless access points can reach subscribers 20km (12 miles) away compared with xDSL's ~3km (2 mile) limitation. Although implementing a wireless network involves construction that is not required when using the telco's infrastructure, the potential pay-off dwarfs that of wired technologies. Add VOIP to this scenario and your ISP suddenly can offer services approaching those of the telco. You can read a March 2002 ISP Planet article

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What kind of router will I use?

A GNU/Linux-based router is the most flexible and cost-effective solution. Your backbone provider may recommend and wish to rent you a proprietary router. This is fine if you have a system administrator who knows how to operate it; otherwise decline their offer and stick to a GNU/Linux router. The advantage of using a GNU/Linux router is that the system administrator does not need to learn the management software of the router. As your ISP grows, the GNU/Linux router can be scaled upward with no change in operating procedure. The advantage of using a proprietary router on very large systems is that the data transmission speed can be better since large routers integrate the fibre-optic WAN port into the same unit.

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What is the bare minimum I can start with?

You could start with one computer and two (or more) modems, creating the world's smallest ISP. A fun hobby, but as a business it is a dead end. To operate an ISP with any profit requires at least 48 analogue lines and at least 350 subscribers, operated by one person. With more than one person or higher-cost digital lines the revenue needs naturally increase.

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What about Frame Relay and DSL for the backbone?

DSL is a fine starting point, but remember you will have to get a resale contract (a home DSL account will almost certainly not allow you to resell the bandwidth). In general, DSL is only suitable for relatively small numbers of subscribers (perhaps as many as one thousand, depending on the speed of DSL service you get and the speed you offer to subscribers). Frame relay is a burst data transmission method, as opposed to T1 which gives you the full bandwidth all the time. With a 1.5Mbps frame relay line, your actual bandwidth could be well under the full T1 line speed. On the other hand, if your telco has an under-utilised circuit using frame relay could give you T1 speeds for less money. With all these national providers, does the small ISP still have a chance? The market still holds great promise for small ISPs in areas which have poor or limited service. The service that a local ISP can provide to its customers far exceeds that of a national ISP. The Internet sounds so easy and enticing, but many computer users have difficulties and need help in setting it up. Nationals often leave people "on hold" for 20 minutes or more and have poorly trained technical staff. By using standard Internet software (such as the sign-up CDs ISP Ltd. provides) and providing good telephone support, you can minimize the chance of problems and maintain an excellent reputation for your ISP. Nationals also tend to have slow access speed. When people see that a national ISP offers 56k connections (as they all do), they think this defines the speed they will receive. There are people who have switched from a national's 56k connection to a local ISP's 33.6k connection and found the speed to be two to three times higher. The extra speed is achieved because the ISP's computer network is local whereas the national ISP's network may be across the country.

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