Well, tier 2 is very ambitious. It is a very difficult point to enter the market, let me qualify this statement.
If you looking to provide internet access on a second tier level, then this is the scenario.
In the good old days of dialup it was strait forward... get a 2MBit line onto SAIX's network and MARKET! If you got that line up to 80% capacity you're making money.
However in the new market with broadband and the like, it is a bit more difficult.
The ISPA (
www.ispa.org.za) has negotiated the rates at which peering is purchased (peering being the point at which your dedicated lines peer with SAIX, IS or Verizon). They haven’t done a great job of this and it is very expensive per 2MBit block. Datapro, SA’s largest independent ISP (Probably the closest to second tier) is looking to run their own network and has come to the following conclusion, to effectively make a profit from a peered network, the ISP has to peer at 155Mbit/s and sell to 80& capacity; which is a tall order even for a giant like Datapro.
Thus most ISP’s have chosen to purchase bandwidth from Tier one providers and resell it to their clients. Thus eliminating the need to put in much infrastructure… in fact to do this effectively all you need is a radius server placed in a reliable data centre; the radius server controls the authentication and bandwidth management of your users, and provides them with their stats login etc. You as the ISP simply on-sell your purchased GB’s at a profit to the users.
The wholesalers have different models as below:
SAIX:
1. Accounts (Radius server nor required):
Analogue Dialups
ISDN Dialups
3GB shaped ADSL Accounts
4GB unshaped ADSL Accounts
Or
2. Per GB (Requires radius server)
Here you simply pay for the bandwidth you use on SAIX’s network.
This leaves the ISP free to bundle their accounts however they wish, so we end up with innovative offers like the 1GB prepaid accounts from Web Africa, as well as larger accounts such as 5, 10, 20 and 30GB
The purchasing requirement for SAIX is that the ISP has to have a minimum of a 64KB dedicated line (or so it was last I checked)
IS:
IS having the benefit of their accounts having large amounts of local access i.e.
An IS 10 GB account 1 GB international access, 9GB local (cheaper than a 3GB SAIX account)
An IS 30GB account 3 GB international access, 27 GB local
You can upscale the international portion from there at an additional cost… it’s also important to note that IS don’t shape their accounts to the same extent as SAIX.
IS also has a range of uncapped products to resell.
The purchasing requirement for IS, is a minimum monthly of R15000
IS’s network is unfortunately not as stable as the other networks.
Verizon Business:
Verizon only sell 2 products.
An unshaped product, for which they bill ISP’s on a per MB basis and a Local only product also billed per MB at a far reduced rate (20% of the cost of the unshaped)
There is no minimum purchasing requirement for Verizon Business
There are also 3 major wireless internet providers which offer reselling possibilities, these are:
Sentech which has a vast wireless network with dedicated speeds and smaller coverage per tower and are partnered to some degree with IS, I’m not 100% certain of their packages or particulars
iBurst which also has a vast wireless network but speeds vary on distance from the tower, however coverage area per tower is bigger.
Vodacom 3G the most coverage and highest speed of the wireless on-sellers, but also by far the most expensive… I’m not really if the have a dedicated reseller program, but I do believe that MWeb resells them.
Then there is another aspect the ISP business which is hosting.
Hosting
To host one needs servers of some sort, these can be located locally or internationally or both.
International servers have a HUGE bandwidth benefit and you can usually rent top of the line server hardware in a state of the art datacentre with unbelievable 24/7 support for a few hundred dollars a month. Theses usually ship with about 1200 – 2000GB of monthly traffic allowance. (Bare in mind that the Data Centres outstrip ANYTHING we have in this country by 10’s if not 100’s of times). Thus the international hosting environment is attractive as it is extremely reliable and profitable for an ISP; it is also very low maintenance as all of the hardware maintenance is handled by the international provider.
However many South African companies prefer to be hosted locally for a multitude of reasons, one of the most common being speed… although the international data centres have monstrous connectivity, our country’s international connectivity leaves a lot to be desired. Thus you need to look at a local server offering… you can rent servers from the big boys such as IS or SAIX, but this is restrictively expensive.
As a self respecting tier 2 ISP you would really want to put your own datacentre in place, this is an expensive and difficult process however. The biggest hindrance again is connectivity; there is a specific player who rules the lower end of the hosting market which is Hetzner. They have 2 data centres one in JHB and one in CPT (Gallo Manor and Greater Westerford). They have solve the connectivity problem by locating themselves in the same building as their upstream provider, and thus have 2 100MBit fibre connections strait onto Verizon’s backbone. Hetzner also sells bandwidth at the lowest rate available in SA (9c per MB), this is because of the large amount of though put onto Verizons network and the fact that they cross subsides bandwidth from their German counterpart which is also peer’d Verizon as far as I understand.
As a fledgling ISP one might look at renting space from a big provider in order to offer server co-locatation and perhaps dedicated server rental.
But ultimately, irrelevant of where you place your self in the ISP market, one of the biggest hurdles to over come (apart from the ridiculous telecoms costs and anti-competitive behaviour of the giants). Is competent support staff, and preferably 24/7 support. This is a very difficult thing, but is key in growing an ISP business, many companies will pay premium rates for services if they no the support infrastructure is in place (hence MWeb being so expensive). Irrelevant of size, ISP’s can win a large client base by offering dedicated, efficient support. Having a well developed customer orientated management system that integrates everything from the hosting to the connectivity is also a HUGE plus and will minimise workload through automation. None has a better system than Web Africa in my opinion, their management system is an art form on it own
There are of course MANY peripheral services etc. to offer, but I won’t get into that now.
I hope this information is useful for you… I can give you more down to the finer details, as this is all pretty broad.
Good luck with your ISP business, I hope you have a somewhat clearer vision of where you wish to go from here.
