ISP Business Guide for Entrepreneurs
ISP Business Guide for Entrepreneurs
An Internet Service Provider (ISP) is an entity that connects people to the internet and provides other
related services such as website building and hosting.
An entity offering transmission, routing or providing of connections for digital online communications,
between or among points specified by a user, of the material of user’s choice, without modification to the
content of the material as sent or received.
If you are considering starting an internet service provider business, you should consider the following:
Executive Summary
SWOT analysis
Market Research
Your Strategy
The Team
A marketing plan
An operational plan
Financial projection
An appendix
Register your business
One of the first things to consider when setting up a business is “Business Registration”.
Business Registration refers to the legal process used to form a new corporation. A corporation may be a
business, a non-profit organization, a club, a charity organization, an association, etc.
In Nigeria, according to the provisions of the Companies and Allied Matters Act (CAMA) 1990, the
Corporate Affairs Commission (CAC) is the statutory body legally empowered to incorporate a business.
Once the Certificate of Incorporation is issued to a business, it then means the business is a legal entity
(can sue and be sued), distinct and separate from its owners.
You can also read Tax and Regulatory Matters for Foreign Investors in Nigeria
In Nigeria, it is a statutory requirement that all duly registered businesses and companies submit their
annual returns yearly to the CAC.
New companies may not file its return within the first 18 months of its incorporation, while for older
companies, the annual return is due no later than 42 days after its Annual General Meeting. Section 374
CAMA.
The market research will show that internet access is needed in homes, schools, workplace, religious
places, shopping malls, public places such as airports, markets, libraries and recreational parks. All
aspects of the economy need internet access.
These services may be free to the general public, free to customers only, or fee-based.
All these go to show or prove the point that the market in this business is endless and very vast.
How to start
Similarly to a franchised business model, VISPs operate under the brand name of the ISP whose services
they’re selling, benefiting from the brand recognition this affords.
To become a VISP, you’ll first need to do some research into which ISP you’d like to join. Get in touch with
brands who have VISPs and ask about the packages they offer.
Once you’ve requested to become a VISP for a brand, you’ll be asked to sign an agreement. Be sure to go
through this carefully so that you know what to expect from the arrangement.
Usually, an ISP will sell connectivity services to you at a discounted price, which you can then sell on to
your local customers at a marked-up cost, collecting revenues from these sales. A lot of ISP brands will
also require you to pay them a setup fee.
To gain connectivity, there are a variety of options; including fiber optic cables, Wi-Fi, peering
arrangements and Ethernet. Some methods will be more expensive and require more upheaval than
others; for example, you’ll need to lay fiber optic cables underground.
Find a Niche
To stay relevant in the Internet Service Provider business, it is advisable to pick a niche that will give you
the timely focus and leverage you need to achieve success.
Web hosting
The Nigerian Communications Commission is the independent National Regulatory Authority for the
telecommunications industry in Nigeria. The Commission is responsible for creating an enabling
environment for competition among operators in the industry as well as ensuring the provision of
qualitative and efficient telecommunications services throughout the country.
Individual License
Class License
A Class License is a type of general authorization in which the terms and conditions/obligations are
common to all license holders. Requires only registration with the Commission for applicants to commence
operation.
Our focus in this article, Internet Service Provision Service falls under the individual license category.
Fill the form and produce two copies of the form (2 copies).
Certificate of Incorporation.
Applications should be submitted in triplicates with all necessary documents attached, all spiral bound.
Enquiries should be made to the Commission for the appropriate amount before payment.
On submission of the form, a non-refundable administrative charge; which is 5% of the relevant license
fee would be paid
The Fee Structure for a license is as stated below. This took effect in January 2007 and is currently in effect
till the date of this publication.
Service Validity Fee (₦)
1. Follow the REMITA payment option logo to access the NCC payment page.
3. For some services, the system displays the applicable fees, otherwise enter the amount payable.
4. Submit to generate a Remita Retrieval Reference (RRR) – a unique payment reference for your
transaction. This should be presented at any payment channel.
6. Based on enquires/ confirmation from the Commission, the payment platform displays the
applicable fees, otherwise enter the amount payable.
7. Click “Proceed to Payment” to generate a Remita Retrieval Reference (RRR) – a unique payment
reference for your transaction.
8. Payment could be concluded online by selecting your preferred payment channel or at through
any bank of your choice by presenting the generated RRR to the bank.
Get Insurance
When you run a business, you assume responsibility for the well-being of a range of people, from
employees to customers. Your business activities have the potential to affect these stakeholders in
serious and costly ways, and business insurance protects you financially from some of these
consequences.
Financing options available for anyone interested in starting an internet service provider business are:
Partnership
Service charge
Angel investors
Personal savings
Venture Capitals
Professional Certification
Professional certification in the Internet service provider business includes;
CompTIA Network+
Marketing
Strategies for Boosting your Brand Awareness and Creating a Corporate identity
You can use several different strategies to boost brand awareness and retain loyal customers for months
and years to come. Have it in mind that brand awareness and increasing customer loyalty is an ongoing
project and you can choose several strategies that will help you generate a strong customer base your
business needs.
From staying active on social media sites to simplifying the buying process, implement some proven
strategies to develop a brand affinity for your business. Other strategies may include…
Be transparent.
Stay in touch.
Viable relay sites: To get the best service, your customers must have a direct line of sight with their
dedicated relay site. You can use radio towers, water tanks, buildings, and even homes. Be sure that the
region offers plenty of options when it comes to relaying sites because they will make or break your
business.
Home density: The best locations for ISPs are places that have low-lying houses. For places with tall
buildings, that create issues with relay sites, while rural areas do not have enough homes clustered
together to facilitate efficient use of access point towers.
Types of houses/roofs: The roofs you are dealing with will determine how difficult or easy it is to install
the needed equipment. This issue is often easy to solve by hiring different technicians who are
comfortable with varying roof setups.
Area topography: Again, a line of sight issue will arise with hilly locations. Low-lying plains are usually best
but that does not mean you cannot build a WISP business in other locations — it will just require more
specific expertise and may cost a little more.
Fiber availability: You will need to find reliable broadband internet providers. Preferably, you should find a
building that already has an excellent fiber connection so you do not have to pay for trenching. But you
can also get Dedicated Internet Access and rent space from a data centre for your equipment.
Competition: Find a location where people are not happy with the ISP and you will have a much higher
chance of penetrating the market.
Planning restrictions
Local amenities
The number of competitors
Evaluate an Area
Before you start building anything or spend any money make sure that you’ve picked a geographical area
with the right characteristics to allow you to meet your goals.
Home Density
Suburbs tend to be great places for WISPs. If the area is too rural you won’t be able to fill up your towers
enough to be profitable. In cities the large buildings cause a line of sight problems and many people live
in apartment buildings.
Ideally, you’ll be able to add at least 50 customers to each tower. At a 10% take rate (which is pretty good
but not unreasonable) that means you need to be able to see at least 500 rooftops within about 3-5 miles
of your tower.
Types of houses/roofs
Shingle roofs are much easier to install on than tile roofs. If most of the roofs in your area are tile you’ll
want to carefully plan how you’ll be able to do the customer installs.
In general, take a look at the home styles in your area and make sure you’d be comfortable working on
the rooftops (or hiring a technician and asking them to work on the rooftop)
MDUs (Multiple Dwelling Units – apartment buildings, townhomes, attached condos, etc) bring up some
unique challenges but can also be very profitable.
Topography
Remember that you’ll need line of sight from your relay sites to each of your customers. Hills can help
with this – if you can install your relay site on a structure high up on a hill you might be able to serve a lot
of homes.
Hills can also be a problem, of course – too many of them and you won’t be able to find a relay site that
has a line of sight around the hills to enough homes.
An ideal situation is a valley surrounded by mountains with foothills – find places in the foothills to install
your relay sites and you will be able to see all of the homes in the valley.
Fiber availability
You’ll need an upstream fiber connection to get your customers online. Sometimes you can also purchase
Dedicated Internet Access from a data centre and also rent space on the data centre’s roof for your
wireless equipment.
Ideally, you’ll find a building that already has a fiber connection (an ‘on-net’ building) so you don’t have to
pay for any additional trenching, which can be very expensive.
Finding and activating your fiber connection will be one of the most time-consuming pieces of getting
started with a WISP, so plan and get started early.
Competition
If the people in your area are already happy/complacent with the Internet service options that they have
then you will have a hard time getting customers. Switching Internet providers is a hassle. Even though no
one loves Comcast sometimes the service is just reliable enough to keep people from switching.
Fiber Providers
To start an ISP you’ll need a connection to the public Internet. In most cases, the best way to do this is to
buy a fiber connection from an existing provider. Fiber is available in unexpected places sometimes –
fiber is commonly installed using grant money and is sometimes left unused due to the expense of last-
mile installation (getting the fiber from where it is to down the street at a customer’s home) and because
of restrictions surrounding the grant money.
This may seem weird at first but in practice isn’t much of a problem – the business units that sell fiber to
businesses vs sell Internet to homes are very much separate and happy to take your money.
Already built into a building (so you don’t have to pay to dig up the streets and run new fiber)
If you are building a network in the suburbs of a larger city you might start your search at the office
buildings near the edge of the city. Often these buildings already have fiber available and they may be
willing to lease roof space to you for your relay equipment.
There are usually other regional providers as well that will be specific to your area, so you may need to do
some searching. These companies usually won’t give you a map of where they have service, but
sometimes they will take a list of addresses and then tell you which ones are on-net. Make a list of
buildings that you think would work for your needs and get the addresses and then start calling around to
fiber providers.
You can also physically go to the area where you’re looking for fiber and look for fiber enclosures and
hardware in the ground or on the exterior of buildings. Sometimes you’ll see boxes helpfully labelled as
fiber infrastructure with the name of the company.
You probably need less than you think. A 1Gbps fiber connection will easily serve 500-800 customers,
regardless of the speed plans, you offer. Interestingly, customers don’t tend to use more data in total with
higher speed packages – the average usage on the fiber connection ends up being about the same
regardless of what speed plans you offer.
I like to think of it this way: Say I have 500 customers on a certain fiber connection. If that connection had
unlimited bandwidth how much would the customers use in aggregate at the peak, and for how many
minutes out of the day would they use more than 1Gbps? Right now even with a very tech-forward
customer base, 500 customers will only rarely spike above 900 Mbps (0.9Gbps). That means that even at
peak times a customer could still come on and run a speed test and get 100Mbps.
In general, I would recommend starting with a 1Gbps fiber for nearly all applications. You usually won’t
save much money trying to get less than that even if you’ll never use it. Then just watch the usage and
make sure to upgrade when you see it start to hit its capacity regularly.
Negotiate a Lease
Once you have found a building that you think has a fiber connection, try to contact the property
manager and negotiate a lease to put your equipment there. Order the fiber connection as early as
possible – it will take longer than you expect to be lit up. Expect at least 90 days even if the salesperson
tells you otherwise.
Relay Sites
For this step, you’ll make a list of potential relay sites in your area. Once you have the list you can start
trying to contact the property owners of the relay sites to negotiate a lease.
Line of sight back to your fiber or another relay – You’ll probably feed the relay site with a wireless
backhaul, so you’ll need line of sight to something.
Line of sight to your customers – In most cases, you’ll want to be able to see several hundred rooftops
from a relay to make sure it will be profitable.
Easy access to 115V AC Power – This is easy to overlook when you’re getting started. Make sure you have
a place to plug in your equipment! Rooftops often do not have AC power outlets. Also, structures like
telephone poles and water tanks often do not have easy access to AC power.
A place to mount your equipment – Make sure you can attach your equipment to the structure somehow.
Scan the horizon for buildings or other structures that are visible from the street. These could make good
candidates for relay sites. If possible physically visit these locations – can you see lots of rooftops from
those places?
Also note the height of the trees – are most houses surrounded by trees, and are the trees taller than the
houses? If so that will be a problem.
Make sure you’re using Google Earth Pro. If you’re lucky the area you’ve chosen will have high-resolution
topographic data available like this:
Even if you don’t have that high-res data you can still get a good idea about trees, foliage and buildings by
looking at the satellite view. Zoom in close to the rooftops of the areas you’re trying to cover and then pan
around and look at the horizon. Anything that pops up over the horizon might make a good relay site
candidate. To run a viewshed:
Right-click the marker and select ‘Show Viewshed’ <– this is only available in Google Earth Pro
You might get a pop-up asking to move the height of the marker, just click ‘Adjust Automatically’
Hardware Platforms
Here are some of the companies that make access point and CPE equipment. (Reminder: the Access Point
goes at your relay site and multiple CPE devices can connect to it – one CPE device will go on each
customer’s rooftop.)
In some cases, it’s possible to mix and match hardware manufacturers for Access Points and CPEs but
you’ll get the best performance if you use the same for both.
Ubiquiti
If you’re unsure about what to choose, Ubiquiti is a great place to start. Ubiquiti hardware is not the best
on all metrics but it is the cheapest and is very user-friendly. As of this writing, the latest Ubiquiti
equipment is the AirMax AC platform and includes Access Points, CPE equipment and Backhauls.
Ubiquiti also makes most other equipment you will need to run a WISP like higher capacity backhauls,
switches (outdoor and indoor) and routers.
MikroTik
MikroTik makes unlicensed wireless equipment as well as many other hardware products needed to run
a WISP such as routers and switches.
Bai Cells
Bai Cells makes LTE equipment for use in fixed wireless networks. This is different from most other
companies that use Wi-Fi chipsets with some software modifications. LTE has some distinct advantages
over Wi-Fi descended systems.
Mimosa
Mimosa is a newer company gaining traction with low-cost products that compete with Ubiquiti.
Cambium
Backhaul Manufacturers
Each of these companies makes a variety of Point to Point backhauls with different features and price
points.
Siklu
BridgeWave#
SAF
Dragonwave
Other Equipment
Altelix
DDB Unlimited
Shireen
MultiLink
Enclosures and various other items for carriers.
Network Topology
This section covers how to build the routing and switching topology for your network. Your needs will vary
considerably based on the specifics of your network so if you’re not familiar with all of these concepts you
may need to do some outside research
Terminology
These are terms that will come up while discussing network topology. If you are entirely unfamiliar with
these terms you might want to start with some background reading.
Router – A device that sends packets to different destinations based on the packet’s destination IP
address and the router’s routing table.
Public IP Addresses (v4 and v6) – An Internet address that is routable on the public Internet. All devices
need to have a public Internet address to communicate on the Internet, and all addresses must be
unique.
Private IP Addresses – Any of a set of IP addresses that are set aside to be used in private networks. These
addresses can only be used on private/internal networks, not the Internet.
NAT – Network Address Translation. Allows devices that are using private IP Addresses get on to the
Internet by sharing a Public IP Address.
Network Switch – A device that sends packets to different destinations based on the packet’s destination
MAC address and the switch’s bridge table.
DHCP – Dynamic Host Control Protocol. A service that provides IP Addresses and DNS configuration for
the devices on the network so they don’t have to be configured manually.
VLAN – Virtual LAN. Allows multiple logical LANs to co-exist on the same switching hardware.
The easiest, most straightforward network configuration resembles what you probably have in your
network at home – a router with 1 public IPv4 address and all of the devices connected to it using private
IP addresses and NAT to get to the Internet.
This configuration isn’t very scaleable due to having all of your customers on the same broadcast domain
and sharing the same IP address, but it’s an OK place to start.
If you can get more than one IPv4 address from your Fiber provider then go for it – you can configure
your NAT to use a pool of IP addresses rather than just one, which is a little better.
You can also try to push your customer’s traffic to IPv6 as much as possible. IPv6 addresses are easy to
come by and most equipment and many current web services support IPv6.
During normal network operation, all devices on the network emit ‘broadcast’ packets – packets that are
sent to all other nodes on the same broadcast domain. With the above configuration, all of your
customers are on the same broadcast domain, meaning that all of those packets will go to all of the
customers and will quickly slow down the network. To avoid network congestion you’ll want to split your
customers up into multiple broadcast domains.
Adding routers or using VLANs are both ways to break up your broadcast domains. Both are explained
below.
Adding routers
Adding a router at each tower allows you segment broadcast domains to a single tower or even a single
access point. Each tower can have its routed interface with the default route in the router pointing at the
upstream relay’s router.
Pros:
Routing tables can be configured automatically using a routing protocol (like OSPF)
Cons:
Routers are more expensive than switches (for the same performance)
Getting your routing protocol configuration right can be tricky, and not using one means lots of manual
configuration
VLANs
A VLAN segmented network will use a switch at each tower rather than a router. A VLAN can be built from
each access point to the core of the network. This allows each tower or even each access point to be on
its routed interface with the router at the core of the network.
Pros:
Less expensive
Cons:
You will probably be selling your service with an associated speed package – say 30, 50 or 100Mbps. If you
find that some customers are consistently using more than what they’re paying for then you’ll want to
limit their max throughput so they don’t slow other customers down.
The easiest way to start doing this is to set limits in the CPE radio on their roof. All modern WISP
equipment will allow you to configure the max throughput for download and upload speeds.
Customer Walkthrough
Start the install by walking through the process with the customer. Make sure to hit each of these points
before you get started:
Roof equipment Make sure they’re OK with the equipment you’ll be putting on the roof and the location.
Let them know that you’ll seal the roof where you install the mount.
Wireless Access Point Location Help the customer find the best place in their home for their wireless
router. If they are switching to your service from another provider ask them if there are places in the
house where the wireless signal isn’t great and see if you can help them find a better location. Note that
you will need to get a cable from the roof outside the house to the router – balance the customer’s needs
against your tools and ability to run the cable.
Cable Entry Point After you’ve decided where to place the customer’s wireless access point determine
where to bring the cable in the house. You may need to drill a hole through a wall to bring the cable in (in
a similar way to satellite TV or cable TV installations.) Let the customer know what you’ll be doing and
respond to any of their concerns.
Cable Run Show them where you’re going to run the cable from the roof to the entry point. Try to hide the
cable as much as possible using rain gutters or other features of the house
Ways to Advertise
The hard part about advertising for a WISP is avoiding advertising to customers who can’t get your
service. Often you are only able to provide service to a single neighbourhood or even just part of a
neighbourhood because of lack of line of sight to your tower. Advertising to homes where you can’t
provide service is a waste of money and can also discourage customers who get excited about your
service and call in only to find it’s not available.
Many WISPs start by advertising with door flyers. Hang flyers on the doors of the homes where you’re
confident you can get coverage. Once you have some customers you can start to rely heavily on referrals
– ask customers to refer their neighbours and consider giving a free month of service for every customer
referred.
Selling to Businesses
Business Internet connections can be very lucrative and low maintenance. Many businesses rely heavily
on their Internet connection and are willing to pay for a second connection just as a backup, especially if
the second connection uses entirely separate infrastructure from the first one. Often, even if multiple
providers are in a commercial building they all share at least some pieces of infrastructure so you have an
advantage of selling an entirely separate connection.
Like most B2B sales the sales process can be long and very involved. Consider hiring a commission-based
salesperson to go after large business accounts. Attend local business events and talk about your
services. Familiarize yourself with the other options available to businesses in your area and define your
products in competitive ways
Computers
CPE’s
Cable
DSL
Fibrenet
2. Spectranet Nigeria;
5. Smile Nigeria
6. Cyberspace Limited
7. MTN Nigeria
8. Airtel Nigeria
References:
www.startups.co.uk
www.ncc.gov.ng
www.profitableventure.com
www.digital.com
www.startyourownisp.com