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Internet Service Providers

An Internet Service Provider (ISP) is a company that provides access to the Internet. The majority of ISPs supply users with software, dial-up numbers, Internet Protocol (IP) addresses, login names, and passwords in exchange for a monthly fee, which can range from $10 to more than $100 depending on the company, the type of connection, the number of access hours, and the availability of additional packages for Web building. ISPs are also in charge of maintaining hardware such as servers, routers, and multiple phone lines, which are necessary in order for information to be exchanged between the users and the Internet. The general public tends to use the terms ISP and Internet Access Provider (IAP) interchangeably, but there is a small distinction between the two. IAPs often offer only modem or PPP (point-to-point protocol) connections; ISPs offer the same access, but can also provide direct connections (e.g., T1, DSL, satellite service) and additional services such as Web development and Web hosting.

Early Internet Connectivity and the Rise of the First ISPS

From the 1960s to the 1980s, the Internet was primarily used by the government and the academic community; therefore, there were only small groups of networks throughout the nation, with limited accessibility. It was not until the late 1970s and early 1980s that the National Science Foundation (NSF) initiated the idea to expand access to include more users. ISPs such as Performance Systems International (PSI), Advanced Network and Systems (ANS), and Sprint's Sprintlink were made available, but were restricted to specific groups of users, such as those in academia and military branches. It was not until around 1989 that the first commercial ISP, The World, allowed the general public to connect to the Internet. Companies such as CompuServe and Prodigy, while providing online services, did not become ISPs until after The World debuted. America Online (AOL), which entered the ISP market in 1989, accumulated a million users by 1994, thus becoming the biggest national ISP.

Initially, in order to promote their services, ISPs mailed installation software on CDs or disks to the general public, offering them free trial memberships that ran in tens or even hundreds of hours. ISPs had alliances with Web browser companies at that time, and would include that browser on their installation CDs. In late 1998, AOL proposed a merger with Netscape, thereby cornering a significant share of the ISP and Web browser business. This alarmed Microsoft, as AOL's default browser was Internet Explorer (IE) and Microsoft promoted AOL's dial-up service icon on its Windows desktop. During Microsoft's anti-trust lawsuit, AOL alleged that Microsoft planned to include the Microsoft Network (MSN) icon, and exclude AOL's, in the event of the AOL/Netscape merger. AOL claimed that it would not drop IE as its preferred Web browser and merged with Netscape in 1999. The majority of ISPs, including AOL, carry both browser manufacturers' software on their installation CDs, and the user can decide which to install.

Alliances and Competition

The latest trend in ISPs is to form alliances with companies other than browser providers, in order to gain and sustain users. ISPs team up with local companies that already have an established customer reputation; the recent alliance between America Online and retailer CompUSA is one example of this trend. Local companies, called Virtual Internet Service Providers (VISPs; in this instance, CompUSA) promote and sell the Internet connection in their stores, while the ISP (in this instance, AOL) provides the VISP and its customers with the actual service (e.g., dial-up numbers, servers), and also promote the VISP's stores within its service. Other ISPs like MSN have started forming alliances with computer companies such as Dell. Consumers who buy new computers receive such promotions as rebates on computers or one year of free access if they sign up with the partner ISP.

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