Used Gear Minimizes ISP Start Up Costs
There has been never a better time to start a dialup ISP?if you can figure out how to make money?as there is a great deal of used equipment placed on the market by bankrupt ISPs.
by Max Smetannikov
A rash of ISP bankruptcies over the last four years has flooded the market with basic ISP gear priced at 20 percent to 40 percent of the original value. A Cisco 3660 router, an ISP classic, can be had for $5,000 as opposed to $15,000 brand new. A nicely configured Cisco 3640 router could go for $2,500 as opposed to $10,000. An access concentrator like a Postmaster 3 can go for $900, as opposed to $9,000 several years ago.
As prices for basic communications services have fallen dramatically (by up to 50 percent) over the last year and a half, an ISP can be launched for about $10,000, plus monthly business expenses.
"E-Bay is your friend," says Patrick Gilmore, who owned and ran an ISP in the early 1990s and currently works for Akamai.
A number of resellers of used gear have popped up recently, offering services specific to ISPs. T3 Systems is quickly making a name for itself as a good destination for used gear. And Portmasters.com is now the premier destination for used Lucent dialup concentrator gear.
To provide basic dialup and dedicated data services, an ISP startup needs a dialup concentrator, which allows modem calls to be received; a router for an Internet connection; and a server or two to run various must-have software applications (such as e-mail).
Most ISPs should, if possible, start with gear and services supporting at least 48 modems. Supporting less than this entails using gear that is not commercial grade. Supporting more would entail buying more T-1 lines from the phone company, which would be expensive.
Most ISPs also want to have a T-1 leased line or a PRI (ISDN) line going into the phone company to connect the ISP's equipment to the PSTN, and enable dialup and dedicated circuit users to connect to the ISP. The second half of the communications services puzzle is connecting the equipment to the Internet. While cheaper cable and DSL broadband options are usually available, veterans like Gilmore recommend against anything less than a T-1 for connecting to the Internet.
"I would not get cable or DSL. For some reason, all the fledgling ISPs I know think they can use their cable modem to run an ISP," said Gilmore. "First, the upload speeds are slow. Second, you cannot get the IPs you need. Third, the cable and DSL companies are looking for people running web servers on their links, and frequently (and randomly) filter things like port 80 inbound." (Port 80 is Internet traffic?filtering it out would effectively shut down the pipe.)
The choice between a T-1 or a PRI line is also important. Leasing a T-1 means the only service an ISP will be able to support is dialup. Leasing a PRI means an ISP can turn around and sell BRIs (i.e., ISDN lines configured for individual use) as a small business service?a consideration in areas where there is no broadband.
Concentrate, concentrate. . .
Either way, at the center of an ISP setup lies a piece of equipment called a remote access concentrator. Two top brands in that space used to be Livingstone and Ascend, both since taken over and discontinued by Lucent. Livingston's flagship product used to be Portmaster, and Ascend is known for Max TNT. In the post-Lucent acquisition world, the box to buy is Portmaster, especially for a small ISP.
"I believe Portmasters.com bought the source code rights from Lucent and plans to turn that software into open source, which will be a good thing for the community," said John Brown, chief executive of Chagres Technologies, a consultancy whose services include helping launch ISPs. In other words, Portmaster should have ongoing support and software upgrades, while Ascend may not.
When you get your hands on a Portmaster, you'll see why 48 is a good number of modem ports for a startup ISP. One of the most popular models, Portmaster 3, supports up to two T1s or PRIs. One T1 supports 24 ports, and one PRI line supports 23 ports, thus an ISP that deploys a full Portmaster 3 will support 48 or 46 dialup modems. Brown estimates than an average oversubscription ratio in the industry is seven to 10 users to a modem port. Thus one Portmaster 3 can support up to about 480 dialup users.
The route to service
The next big purchase is a router to connect to the Internet. Cisco is the dominant vendor in this department, and models starting with Cisco 3640 typically offer enough horsepower even as the ISP starts growing.
Any decent ISP needs a server to host specialized software. Brown, a great believer in reliability, recommends four separate machines for each application, since each is core to ISP operations. Technically, all can run off one server.
The applications are: an authentication server, an e-mail server, a DNS server, and a dedicated firewall (the firewall is considered optional by some).
The router should have between 256MB and 512MB of physical RAM, 20GB or more disk space, an Ethernet NIC, reasonable video cards, and an oversized case for better cooling. Unless you buy Linux (FreeBSD is a free alternative), all other software is typically free (you risk being shunned by fellow ISPs if you buy Windows).
Popular choices of free software are BIND for DNS, QMail for e-mail, and RADIUS for authentication.
Many ISPs also get into webhosting, since the only piece of software they really need to offer the service is a Web server and the most popular, Apache's HTTP server, is free.
One Portmaster, one router, and one server will set you back $900, $2,500, and $1,000, respectively, for a grand total of $4,400. Prices for T-1s vary, but deals abound. Washington D.C.-based Broadband.com recently advertised a nation-wide deal for a full T1 with a free Cisco 3640 for $948/month. Add slack for additional costs?redundant servers, PRIs, and such?and $10,000 in startup costs looks like a reasonable proposition.
Throw in some more money for security, and your only problems are finding customers and making money.
Used Gear Minimizes ISP Start Up Costs
There has been never a better time to start a dialup ISP?if you can figure out how to make money?as there is a great deal of used equipment placed on the market by bankrupt ISPs.
by Max Smetannikov
A rash of ISP bankruptcies over the last four years has flooded the market with basic ISP gear priced at 20 percent to 40 percent of the original value. A Cisco 3660 router, an ISP classic, can be had for $5,000 as opposed to $15,000 brand new. A nicely configured Cisco 3640 router could go for $2,500 as opposed to $10,000. An access concentrator like a Postmaster 3 can go for $900, as opposed to $9,000 several years ago.
As prices for basic communications services have fallen dramatically (by up to 50 percent) over the last year and a half, an ISP can be launched for about $10,000, plus monthly business expenses.
"E-Bay is your friend," says Patrick Gilmore, who owned and ran an ISP in the early 1990s and currently works for Akamai.
A number of resellers of used gear have popped up recently, offering services specific to ISPs. T3 Systems is quickly making a name for itself as a good destination for used gear. And Portmasters.com is now the premier destination for used Lucent dialup concentrator gear.
To provide basic dialup and dedicated data services, an ISP startup needs a dialup concentrator, which allows modem calls to be received; a router for an Internet connection; and a server or two to run various must-have software applications (such as e-mail).
Most ISPs should, if possible, start with gear and services supporting at least 48 modems. Supporting less than this entails using gear that is not commercial grade. Supporting more would entail buying more T-1 lines from the phone company, which would be expensive.
Most ISPs also want to have a T-1 leased line or a PRI (ISDN) line going into the phone company to connect the ISP's equipment to the PSTN, and enable dialup and dedicated circuit users to connect to the ISP. The second half of the communications services puzzle is connecting the equipment to the Internet. While cheaper cable and DSL broadband options are usually available, veterans like Gilmore recommend against anything less than a T-1 for connecting to the Internet.
"I would not get cable or DSL. For some reason, all the fledgling ISPs I know think they can use their cable modem to run an ISP," said Gilmore. "First, the upload speeds are slow. Second, you cannot get the IPs you need. Third, the cable and DSL companies are looking for people running web servers on their links, and frequently (and randomly) filter things like port 80 inbound." (Port 80 is Internet traffic?filtering it out would effectively shut down the pipe.)
The choice between a T-1 or a PRI line is also important. Leasing a T-1 means the only service an ISP will be able to support is dialup. Leasing a PRI means an ISP can turn around and sell BRIs (i.e., ISDN lines configured for individual use) as a small business service?a consideration in areas where there is no broadband.
Concentrate, concentrate. . .
Either way, at the center of an ISP setup lies a piece of equipment called a remote access concentrator. Two top brands in that space used to be Livingstone and Ascend, both since taken over and discontinued by Lucent. Livingston's flagship product used to be Portmaster, and Ascend is known for Max TNT. In the post-Lucent acquisition world, the box to buy is Portmaster, especially for a small ISP.
"I believe Portmasters.com bought the source code rights from Lucent and plans to turn that software into open source, which will be a good thing for the community," said John Brown, chief executive of Chagres Technologies, a consultancy whose services include helping launch ISPs. In other words, Portmaster should have ongoing support and software upgrades, while Ascend may not.
When you get your hands on a Portmaster, you'll see why 48 is a good number of modem ports for a startup ISP. One of the most popular models, Portmaster 3, supports up to two T1s or PRIs. One T1 supports 24 ports, and one PRI line supports 23 ports, thus an ISP that deploys a full Portmaster 3 will support 48 or 46 dialup modems. Brown estimates than an average oversubscription ratio in the industry is seven to 10 users to a modem port. Thus one Portmaster 3 can support up to about 480 dialup users.
The route to service
The next big purchase is a router to connect to the Internet. Cisco is the dominant vendor in this department, and models starting with Cisco 3640 typically offer enough horsepower even as the ISP starts growing.
Any decent ISP needs a server to host specialized software. Brown, a great believer in reliability, recommends four separate machines for each application, since each is core to ISP operations. Technically, all can run off one server.
The applications are: an authentication server, an e-mail server, a DNS server, and a dedicated firewall (the firewall is considered optional by some).
The router should have between 256MB and 512MB of physical RAM, 20GB or more disk space, an Ethernet NIC, reasonable video cards, and an oversized case for better cooling. Unless you buy Linux (FreeBSD is a free alternative), all other software is typically free (you risk being shunned by fellow ISPs if you buy Windows).
Popular choices of free software are BIND for DNS, QMail for e-mail, and RADIUS for authentication.
Many ISPs also get into webhosting, since the only piece of software they really need to offer the service is a Web server and the most popular, Apache's HTTP server, is free.
One Portmaster, one router, and one server will set you back $900, $2,500, and $1,000, respectively, for a grand total of $4,400. Prices for T-1s vary, but deals abound. Washington D.C.-based Broadband.com recently advertised a nation-wide deal for a full T1 with a free Cisco 3640 for $948/month. Add slack for additional costs?redundant servers, PRIs, and such?and $10,000 in startup costs looks like a reasonable proposition.
Throw in some more money for security, and your only problems are finding customers and making money.
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