ISPs and Small Businesses

The increase in Internet use by small businesses is creating a slew of new opportunities for ISPs, according to a report by International Data Corporation (IDC).

The report “Small Business ISP Sales Channels: Multifaceted Alliances,” examines the variety of services ISPs can offer small businesses and the types of partnerships they are forming to provide the most efficient services.

“As the primary providers of Internet access, ISPs are gaining footholds in small businesses as providers of advanced or enhanced telecommunication services,” said IDC’s Jeannette Noyes. “They have the opportunity to expand their portfolios to include services such as high-speed access, virtual private networks (VPN), e-commerce, remote-access solutions, and even voice services.”

The report also found that ISPs are quickly learning, however, that they do not always have the necessary telecommunications expertise or relationships with small businesses to sell the advanced services directly. As a result, they are developing relationships with communications and computer equipment suppliers, value-added resellers (VARs), competitive local local exchange carriers (CLEC), incumbent local exchange carriers (ILECs), and traditional distributors.

“Distribution alliances provide ISPs with an entree to these organizations’ technical expertise and existing relationships with small businesses,” Noyes said. “There will be an increasing trend to develop partnerships among all the players in the channel — ISPs, distributors, VARs, hardware and software vendors, and LECs.”

IDC found that many of the mid-sized and smaller ISPs have begun aggressive marketing and sales programs to carve out a niche in the small business market. As part of their marketing and sales plans, ISPs and their partners must recognize the growth strategies that small businesses exhibit. According to IDC, small businesses turn to channel partners to facilitate growth and to take advantage of bundled products and services.

The channel partners that succeed will increasingly emphasize service as a critical piece of the marketing mix,” Noyes said.