Eighteen months and $2 million has transformed P.E.I.’s Island Tel from a small local telco to Atlantic Canada’s ISP of choice for e-commerce hosting.
The company’s staff recently expanded to 25 people and, thanks to infrastructure upgrades and DSL access province-wide, now offers five different types of service: Internet, e-commerce, convergent services, Internet content and applications and enterprise management.
“If you think about that, that’s a fairly interesting mix of skills and capabilities,” said Stephen Murray, manager of new services with Island Tel Advanced Solutions (ITAS), in Charlottetown, during a recent Internet World conference in Toronto. “Two and a half years ago, when I came there, there were only three people in the whole organization.” ITAS now hosts 85 per cent of all e-commerce sites in Atlantic Canada, he said.
P.E.I., because of its limited IT resources and high proportion of rural population, presented a number of challenges for the company’s access plans. In 1996, Murray said, there was no real economic development around the Internet, and e-business hadn’t even really been considered.
“It’s very densely populated in terms of land mass, but [the homes] are spread out. The use of IT in businesses and homes is low. This isn’t your typical downtown Toronto marketplace.”
Prior to ITAS’ expansion project, broadband services had already been implemented right across the island. Probably because of its size, it was the first jurisdiction in Canada to have broadband services from end to end, Murray said.
“Some people aren’t familiar with rural communities: there are still places in Canada that have party lines, more than one person on the line. Guess what that does when you get on the Internet with dial access? Nobody else can get on the phone.”
Rather than putting in place fibre technology to centrally deliver access, which might have been fairly easy to do because of it’s small size, the company opted to put DSL access in place across the island.
“We had the capacity to serve up to 200 customers a month, but what ended up happening is that we exceeded our ability to satisfy that capacity, and that was something that we really didn’t expect. Most of that was not people churning out of the dial access business – these were new people entering the market that we didn’t even recognize had a need (for access) up to that point,” Murray said.
At that point, the company had already invested a quarter of a million dollars, so it decided to expand its offerings further to “virtual business centre” capabilities such as personal Web sites, high-speed access, VPN services, on-line bill presentment, unified messaging, hosted services, application services, electronic data interchange, transaction service processing and order fulfilment.
“Being in a small marketplace, you sometimes feel like you are in a bit of a backwater – the dynamics of the future are really almost impossible to predict. Do you aggregate your business, do you put forth your brand strategy, do set forth context or content? And guess what – every one of those is correct, depending on what the situation is.”
In actual fact, not a lot of companies are making money in the Internet business: ISPs are making marginal profits “but not gobs of it” and what’s happening is that the businesses are being evaluated higher than they are actually worth, he said.
People assume that because ITAS is part of a telco, it would get subsidized service, but this isn’t the case, Murray said. “In fact, we pay more than any (other) ISP on the island for our access.”
The other concept ITAS introduced was the ability to profile services and profile users, through dynamic pricing and billing capabilities – something known as content metering.
“You might say ‘so what?’ But, if you can profile the service, and you can tie that to the individual user, now what you do is actually charge based on service type, transaction type, session usage, content information, copyright management – all the stuff people say that you can’t do today. In actual fact we have a solution…not on the market anywhere else that I’m aware of,” Murray said.
Last June the telco – afraid of losing all its long distance billing to voice over IP technology – implemented a billing structure that was based on content profiles of service, with the charges dynamically flowing to customers’ bill. The content involved could be anything from voice, to e-mail, to multimedia, he said.
“So if somebody only wants to view five minutes of a particular video, they don’t have to pay for the whole thing. They may pay 25 cents for that segment of the video, but what’s interesting is that now protects the assets of the creative people doing the work, and it allows people to only take what they want,” he said.
“Historically, most of the models in the ISP business have been subscription, subscription, subscription. But guess what? That model’s changing.”
One example of this is billing for e-mail but not for access, as is already done in some parts of Europe. “Almost in the same context as sending mail via a mailbox – it didn’t cost you anything to put the mailbox there, or to run the trucks to the mailbox to be able to deliver to the end location.” What you pay for are the stamps on the individual pieces of mail that you want to send, he said.