Small Providers Profit in Internet-Access Niche: Compete on Price, Personal Service

By Abrahms, Doug | The Washington Times (Washington, DC), January 2, 1996 | Go to article overview

Small Providers Profit in Internet-Access Niche: Compete on Price, Personal Service


Abrahms, Doug, The Washington Times (Washington, DC)


Small companies that provide Internet access are sprouting up over the local landscape, taking advantage of Americans' growing fascination with cyberspace.

Hermes Internet Service started business in the District about six months ago and is now connecting about 125 people to the Internet. Even though some of its rivals are big corporations, Hermes competes on price and service, even making house calls to fix computer problems, said employee Michael Cary.

"Some people need or want some kind of service that smaller providers like us can really provide," he said.

Millions of consumers bought high-powered personal computers this Christmas season, and they want to do more with them than play video games or type letters. Everyone is talking about the Internet - or at least it seems that way.

About 10 million Americans already can hook up to the Internet through on-line companies such as Compuserve, American Online or Microsoft. But increasing numbers of consumers are bypassing those companies to link up with the Internet through small providers, which offer unlimited access for a monthly fee of between $15 and $30.

More than 1,400 companies across the nation provide this service, according to a recent report by the Yankee Group, a telecommunications research firm in Boston. Yankee estimates that number will shrink drastically as large companies such as AT&T Corp., Bell Atlantic Corp. or MCI Communications Corp. aggressively pursue the business.

But until then, these upstarts have pushed down prices for Internet access - and often offer better service since they don't have millions of customers.

To get started, a company only needs a large personal computer, several phone lines and some electronic equipment. Many companies rent their Internet access from other firms.

Erol's, a local retailer of personal computers, entered the Internet business in August. The company pushed down the price of Internet access to $19 a month - $15 a month for customers who sign a 12-month contract.

"It's a very hot item, and customers were asking us for it," said Steve Housley, general service manager.

Erol's, like many of its competitors, also will design home pages - cyberspace billboards where businesses and consumers can showcase information. College graduates can put their resumes on a home page, or businesses can advertise their services, for about $200 plus a monthly fee, Mr. …

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