Proposal For The Setup of ISP (Abakaliki)
Proposal For The Setup of ISP (Abakaliki)
Proposal For The Setup of ISP (Abakaliki)
Lighthause Communications
Introduction
This proposal is focussed mainly on the modalities involved in the setup of an ISP that will cater for the IT needs of consumers nationwide, or at least for the south, east and northeastern parts of Nigeria. Contrary to popular opinion, it does not require 10+ million dollars (1billion naira) to set up a full-scale and highly efficient ISP. Rather, the most difficult aspect of establishing an ISP is acquiring the requisite knowledge and experience, as well as securing qualified personnel to set up and administer the organisation. After a period of careful research and deductive selections, we have put together a complete and competent technical team to handle all the technical details involved in the actual setup and running of an ISP. What is missing from this team so far has been adequate financiers.
transmission lines, Ethernet, wireless relay, remote access and even dial up connections over POTS (plain old telephone service) form the connections among these computers. These
connections are provided by local operating companies (e.g. NITEL, Interpacket Networks, VGC Communications, etc.) and all of the major long distance carriers. The hardware and the
What is an ISP?
ISP is acronym for Internet Service Provider. This is an organisation that provides services Customers for customers to enable them to connect to and/or access facilities on the Internet. may be anybody C home users, companies, or large corporate bodies.
The Internet Service Providing company that sells computer access to the Internet, also called Internet service provider (ISP) or access provider. A user buys a subscription to a service provider, which gives the user an identifying username and password and a phone number.
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With his or her computer and modem, the user calls, connects to, and logs on to the service provider's computer. The user's computer then lets the service provider's computer take over, acting like a dumb terminal. The user can then utilize any of the tools the service provider's computer furnishes, which can give access to the World Wide Web (WWW), electronic mail (e-mail), File Transfer Protocol (FTP), Telnet, and other Internet services. Some service providers limit the amount of time a user can spend connected to the service provider's computer or charge more money for extra time.
Types of ISPs
International These are ISPs that provide a connectivity backbone to users all over the world to hook up to the Internet. They are the final link to the information superhighway. As such, anyone who wants to get on-line must be linked through a major (international) ISP. There are not very many of them worldwide, such as CompuServe, America On-Line (AOL), Interpacket Networks, UU-Net, Global-1, and so on. AOL is a time-charging, and expensive ISP. It has only a few dial points in Nigeria, and was the first major ISP available in Nigeria, appearing in the late nineties. Most major international businesses and ISPs in Nigeria (as well as many private users) are linked to the world wide web through AOL. Compuserve, and other major ISPs, have no points of presence (POP) in Nigeria. Users have to make international calls to gain access through them to the Internet. Due to the high cost of linking up to the web through these international ISPs with no POP in Nigeria, nearly all of them offer satellite linking, which is a more reliable, stress-free and remarkably fast way to link up. However, there is a running argument about the cost effectiveness of satellite linking over a telephone hook up. But there is no gainsaying the fact that advantages of satellite linking over a telephone hook up far outweighs the cost.
National These are ISPs that serve the needs of local users directly. They form a link between the major ISPs and the end-users of the facilities of the global network. These have POP throughout Nigeria. Generally, they offer time-charging, data-charging or fixed rate or flat-rate pricing. They offer access to the web by linking up to the major ISPs.
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Sub-ISPs These are small-scale providers that further increase the hierarchical structure of the link to the web. They tend to provide services for a clearly defined geographical area. The most common charging model is some variation on fixed or flat pricing with additions for data and time. These ISPs have to be quite creative with their pricing to compete with other. Big advantage is more personalised support and local area knowledge, which create user loyalty (outside of major cities which are well services by many small and larger ISPs and have special pricing).
Services to be Provided
There are so many varied services that users would request. Due to this product mix and pricing, structures constantly undergo updates, revisions and total overhauls at many points. Some of these include:
Web Access: Access is whereby we as an ISP act as the gateway to Internet services for our customers. These customers either want direct access to the Internet individually or wish to tie a larger network of computers directly to the Internet full-time. This access does not have to entail any other single option other than a connection to our Internet server, but in many cases it will. Some of the considerations are discussed below. Dial-up Access Dial-up customers form a bulk of the Internet market. Dial-up customers will be using modems from speeds of 9600bps up to the latest standard of 57,600bps (bps is a measurement of the rate of data transmission. Anything slower than 9600bps is really too impractical for good graphical access and we will not sell to these customers but rather suggest a modem upgrade first. These customers will make up the majority of all our headaches as they will fill our Technical Support phone line(s) with endless calls. Dial-up users want speed! However, we are more than ready to satisfy this need, for our projected transmission and access speed is 2.0Mbps i.e. about
2,097,152 bps (Mode of operation will be discussed in detail later on). Users will also want a POP e-mail account. This is a standard e-mail box that takes incoming mail for users and stores it on our local server until they are able to pick it up at their next call. Dial-up users will want us to provide them with Usenet access as well. Many of them will wish to have their own home page and whether or not we can charge for that depends really on our market conditions.
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Potential customers will call us and will want to know the procedures for getting connected. We need a well-prepared and equipped HelpDesk to attend to their questions. As a potential customer, the most important issue, when choosing an ISP is to find one with a local phone number for you to dial. Otherwise, the phone tolls may cost more than the ISP itself. Most ISPs have several access numbers in their local area only. Quite a few have points-of-presence (POPs), as they are often called, in other major cities. To take advantage of this, there is the need to provide POPs in our target market areas (e.g. Port-Harcourt, Aba, Umuahia, Owerri, Makurdi, Benin, Jalingo, Calabar, Uyo, Lokoja, etc.). These POPs will be terminal servers connected to a digital data service (or linked through radio transmission), which connect to our ISPs main site in Abakaliki. This also ensures centralized accounting and user administration. The digital data service must be able to offer at least 640 links. Each POP will have at least 20 dial-up lines. However, establishing POPs in target areas will be the focus of Third Phase of our operation. MicMicrowave Link Companies use microwave links from an Internet service provider to provide Abulk@ Internet services to many of its in-house employees. A firm utilizing e-mail as a standard worldwide communications link to other offices might need to allow 20+ simultaneous users to access this service. For this high use purpose, dial-up access over a standard phone line is too cumbersome. A microwave link between the ISP and the company=s Local Area Networks, run into the company and integrated into their existing computer network, provides many users with the ability to simultaneously access all of the above Internet services. Web Site Hosting The AWeb@ is a worldwide distributed collection of documents (millions of them) that companies, individuals, educational institutions, and government bodies maintain. Web pages are made up of textual information, pictures, audio and even video files that a user accesses from their computer. Web Aspace@ costs very little compared to conventional advertising mediums. Institutions who create a Web presence generally provide massive amounts of information through them, far more than through other conventional means. Web pages are generally linked to e-mail services for interaction with potential customers and other interested parties. Web documents are not like conventional advertising either, in that a user must actively choose to Ago to@ the web pages that interested them. If I were looking for information on truck parts, I would
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choose to Asearch@ the Web by using what basically amounts to an on-line yellow pages. No one group owns the Web. One benefit of web pages is that they can be accessed from anywhere in the world one or more destinations. E-mail Services E-mail is the most popular activity on the Internet. Electronic mail (e-mail) refers to an electronic message sent through a computer network from one source to one or more destinations within seconds or micro-seconds. E-mail allows company personnel to keep in touch with remote offices and business contacts without spending a fortune on long distance calls or travels. E-mail also provides an excellent distribution system as companies may distribute information about or a new product offering to all of its distributors at once. E-mail also allows for the Aattachment@ of documents to messages. In this way, a geographical presentation, or a spreadsheet can be distributed to many individuals instantaneously. This system is also capable of sending e-mail to fax system anywhere in the world. The e-mail should have a web-based interface for users on the Internet. To send and receive mail on the Internet, you must have
Visual Communications Communication over the Internet improves with each passing day. Video-phone and
tele-conferencing (which used to be featured only in science fiction) are now popular communications media, using the Internet. Such features however requires a fast Internet connection as well as a digital camcorder. For instance, organisations can hold conferences without all the participants being present in one location. With video-conferencing, participants can be anywhere and still participate actively and share in the proceedings. Internet Telephony International telephone calls can as well be made over the Internet connection for the same rate as a local call (e.g. within Abakaliki), without attracting any extra cost. This feature, as at present, is the most utilised feature of the Internet, seconded by e-mail. Internet Libraries
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These are centres in selected higher institutions of learning, equipped with terminals where students can have access to the Internet. Each of these centres will also be connected to the ISP via radio links.
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into other fields of communication technology. Clients= demand for increased services will underline the need for network expansion as the corresponding income generated will justify such further investment.
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= N40,000,000 to N80,000,000 per month income in just two years, about 80% of which can be profit = if the organisation is properly managed. Long established ISPs, such as Linkserve and Infoweb, are achieving four times the turnover level mentioned above. Abakaliki on it=s own will achieve at least 4,000 subscribers in nine months, at an average of N 3,000 per month per subscriber, which gives a projected average monthly subscription = turnover of N12,000,000 per month. A big organisation like UNICEF has expressed interest in =
subscribing to a local ISP, as opposed to the current arrangement of going through Linkserve, Hyperia, or Infoweb (all) in Lagos. The towns of Abakaliki and Awka telephone exchanges are currently being digitised using the Abakaliki 043-exchange prefix. The implication is that Awka and Abakaliki, in addition to Nsukka, will connect to Abakaliki on local-call tariff instead of trunk-call tariff. The surrounding states (of Abia, Anambra, Imo, Ebonyi, Cross Rivers, Akwa Ibom, Rivers, Bayelsa, Delta, Edo, Benue, Kogi, Nasarawa, Bauchi, Plateau, Jigawa, Adamawa and Yobe) and their business cities (e.g. Aba, Umuahia, Awka, Port Harcourt, Onitsha, Owerri, Asaba, Warri, Makurdi, Lokoja, etc.) will provide additional subscribers in the second phase of our operation, greatly increasing our client base and expanding our scope of operation as well as our turnover. These days, Internet access is a necessity for many businesses. By starting an ISP we will be providing for this need in our country and, thus, we will quickly become a valued and respected business. An ISP is a service business. There is no need for extensive capital to purchase inventory, and when sales are made there is no need to re-invest 50% to 90% of the money received in more inventory. After paying bills (most of which are the same for any business), the balance money is declared as profit to keep and use as necessary.
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We can share our ideas, opinions, politics and creations with our subscribers and thousands of others on the Internet. Being an ISP, we have a somewhat captive (and growing) audience, since most Internet subscribers want to see the home pages of their provider on a regular basis. Another benefit is the ability to provide income and employment for our community. In heavily populated areas, such as Abakaliki and Eastern Nigeria, starting an ISP can have enormous potential. Abakaliki alone has a potential of not less than 7,000 subscribers in two years, at an average of N40,000 annually, we are looking at income level of at least N280,000,000 (280m = = Naira) per year. The outlying states are expected to contribute another 8,000 at least, bringing the total number of subscribers to 15,000. This translates to = N600 million revenue per year.
Listening to the news lately, it is announced that the USA and many other countries are planning for the Internet to at least double in the next year or so. That money can stay here, improving our local economy, providing employment and income for all investors in this proposal to become an ISP.
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Setup Requirements
Connectivity
A minimum of at least 64 to 100 and more telephone lines is required which will give us a potential simultaneous dial up connections of around 64 to 100. Since it is not practical to obtain such number of individual lines from NITEL, E1 connections will be used. E1 connection is the best available option as NITEL now provides E1 at the cost of N500,000 per E1 line. E1 is a dedicated = leased circuit comprising of 32 lines (lumped together). Hence to achieve our target, we shall need up to four E1s. NITEL policy insists on fibre optic cable to connect the E1 lines (after approval) to our site which could cost as much as N2,000,000 per kilometre. This fact alone = would determine the location of our site. Internet backbone connectivity will be by Satellite hook-up. An international (major) ISP will provide access to the Internet. On the other hand, we might use NITEL as backbone (which is highly unreliable).
Satellite Transmission This is the most reliable medium to link up the Internet. Worldwide there are about a dozen major Internet Service Providers (ISPs) who form the top structure of the Internet link-up hierarchy. As these ISPs cover the globe, they are often referred to as international ISPs (or major ISPs), or global ISPs. ISPs whose operational region is within a country are referred to as National ISPs (where we fall in). Then there are sub-ISPs that link to the web through National ISPs, who in turn enjoy access facilities from the major ISPs. Then the end-user (who might be home-users, institutions, small-scale businesses, firms and international
organisations, NGOs as well as governmental parastatals) who might want to link up to the web (depending on cost) using any of the afore-mentioned service providers. The major ISP can easily be linked using either an E1 line (which service is being transmission. Connection with the ISP is established using an E1 link leased from the major ISP. provided by NITEL) or Satellite
Dedicated Lines These are special lines from NITEL that can only be dialed by our subscribers. Generally, the idea is that these lines should not be Adisturbed.@ But in Nigeria, that is a risk we have to live with (the NITEL wahala). Definitely, there will come a time when we will receive request
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for dedicated modem lines. These are useful for groups who desire a continuous connection to the net but do not have a need for a lot of bandwidth. This can be achieved through the POTS (plain old telephone system) lines or special dedicated lines commonly referred to as leased lines. However, this type of connection is fraught with a lot of problems. Apart from the difficulty of trying to make a trunk connection (as all ISPs presently are based in Lagos), the connection sporadically truncates, further frustrating the embattled user, who, in desperation abandons the entire idea of enjoying the investment made in the Internet facilities provided. Logging on is a herculean task as one frequently encounters the message Aall trunks are busy, please call later,@ or generally the continuous beeping sound, indicating that the lines are currently engaged, which may be true or not.
Wireless Relay This medium provides faster and more reliable wireless connection for clients who desire a continuous (and relatively cheap) connection to the net. Usually, when a user wants to connect their entire LAN to the net, there is need for a lot bandwidth. This can be achieved at moderate cost through the Radio Links or other wireless network. With the existence of wireless modems, faster Internet connectivity can also be provided to clients who are willing to pay some token to enjoy this modern facility. Usually the equipment is more expensive than the nominal land lines connection.
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We need an attractive home page for our service that has plenty of features and links. It was surprising to discover that many Internet users will change subscribers due to the home page design. Strange, but true!
Marketing
As with any business, we must put exceptional effort into marketing. Most new Internet subscribers will sign up with a familiar name, which is why AOL gets so many subscribers - it's not because their service is better. However, local findings show that the efficiency of the service being provided by any organisation makes the name of that organisation popular, as people prefer efficient (and personalised) services to bogus names and claims. Since we have so structured the organisation to run smoothly under the oversight of some of the best brains in the profession, attaining the level of efficient services that will get us noticed will not be a problem. Additionally, we have compiled a lot of practical marketing strategies that will definitely give us a fair share of the market, bearing in mind that as soon as we start attracting nationwide attention, other existing ISPs will want to come in and compete.
Publicity
The importance of advertising cannot be overemphasised. One inexpensive method is to run a classified ad continuously in local newspapers. Run display advertising at the major road junctions starting at Abakaliki and expanding to all other capital cities in eastern Nigeria. For example, it is recommended that a full-page advert be run on AThe Guardian@ say every other Tuesday of the month. A significant advertising budget has been made to create awareness. Encouraging press coverage will be one sure way of achieving this. Radio advertising and sponsorship will also be just as successful in creating market awareness and ultimately attracting subscribers. Flyers and brochures are another means of attracting subscribers. Like the technical aspect, these would also be in-house to cut down cost. It is planned to distribute Flyers and Brochures with Sunday papers and magazines. This will be cost effective going by the results of investigation of distributors and vendors. Placement of our flyers at all major supermarkets and hotels will be accomplished with little or no incentive. Seminars and workshops will also be organised to further promote a good public image of the organisation, as well as increase our goodwill.
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The main point is to advertise like crazy. Seize every free advertising opportunity we can, and pay for as much as we can. Put ads in local and national papers as we can afford; make them as big as we can afford. Change the ads regularly, but keep some components the same (such as our logo). Radio is a tricky medium and rather expensive, but used in conjunction with plenty of print advertising will be somewhat effective in a market. Sponsoring or promoting radio and TV shows will be far more effective than an announcer reading over some music.
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Services Option 1 - 1 hr per day Option 2 - 2 hrs per day Option 3 - 3 hrs per day
Others Pay as you use (per minute) Microwave links (wireless) Email only Web surfing per minute
Payment of all subscriptions will be at designated banks perhaps including the following banks:
Diamond Bank Standard Trust Bank Zenith International Bank
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Proposal for the Setup and Administration o f a fully-integrated ISP All States Trust Bank First Bank of Nigeria PLC We are targeting a minimum of 10,000 subscribers in the first 12 months. Union Bank PLC
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Estimated Expenditure
The project cost is estimated to cost not more than N110 million. The actual estimated project = cost is N101.365 million. A summarised breakdown of the project budget is presented as follows: =
Preliminary Expenses
Description CAC and NCC Licensing Expenses Office Space Rent Furnishing the Premises Telephone lines and Radio equipment Transportation (1 bus, 1 car) Air conditioning Publicity Administrative Expenses Sub-Total Preparations & Incidentals (10%) Total Amount in Naira 1,150,000 500,000 1,050,000 450,000 900,000 200,000 800,000 1,000,000 6,050,000 605,000 = N6,655,000
Notes !
CAC and NCC License Fees C Before anything else is done, the firm must be registered with
the Corporate Affairs Commission (CAC), Abuja, as a Private Limited Liability Company. Any other licenses or permits we are going to apply for, we must tender our certificate of incorporation from the CAC. The actual ISP License Fee of N550,000, which is for five = years on successful application, is not payable until confirmation of license, which will take about two months. This could be provided for as when it is due for payment.
Office Space Rent C It is recommended that landed property be acquired for the organisation,
as there will ultimately be a lot of restructuring and equipment installations that might
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alter a rented or leased property. However, to cut initial take-off costs, a rented or leased property can suffice. ! !
Furnishing C This figure is tentative as it depends on the actual office space and siting. Telephone Lines C Prior to the installation and connection of the proposed E1 lines from
NITEL, the technical, administrative and marketing team will need telephone lines for their business. To minimize cost, at least two lines are being proposed. Walkie-talkies will also be procured for the field and technical crews to facilitate ease of communication, as well as reduce transit cost and wasted man-hours.
Preparations and Incidentals C This covers local licenses and official permits as well
as travel expenses for the procurement of legal documents and ordering of equipment.
Publicity C The success of the whole project is largely dependent on publicity. One of
the first activities to be carried out is massive advertising in targeted areas. This is preliminary, for after the project set up, extensive publicity campaigns will be vigorously pursued.
Administrative Expenses C This covers allowances for temporary (and preliminary permanent)
staff who will be involved in the delivery, setup, configuration and procurement of materials, as well as cover the cost of organising interviews for prospective employees.
Project Expenditure
Details NITEL Lines and Communication Equipment Local Area Network and Workstations Supplementary Power & Spares B NEPA, UPS, Generators
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Proposal for the Setup and Administration o f a fully-integrated ISP Satellite Equipment Radio Equipment (omni-directional antenna + equipment) Internet Backbone Connectivity - First 12 months Marketing and Publicity Transportation Administrative Expenses & Staff Training Sub-Total Incidentals (10% of Total) Preliminary Expenses Grand Total
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6,000,000 6,000,000 30,000,000 4,500,000 1,350,000 11,000,000 86,100,000 8,610,000 6,655,000 = N101,365,000
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To be on the safe side, this is the least revenue that can be achieved in the first twelve months of operation. With the marketing strategies and efficiency of services we have organised, we believe we can achieve more than double what is stated here.
This is a draft. A full report with Business Plan, Technical Plan and Network Plan will be made available after consultations.
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Project Risks/Pitfalls
As with any business venture, this project is fraught with risks and pitfalls. Success can be achieved if we recognise these pitfalls from the onset and work hard to repel or eliminate them. Some of them are based on trust relationships between the investors and the crew. Risk/Pitfall 1. Potential excess cost by hiring proclaimed experts or entering into a turn-key agreement with a consultant 2. Stealing a docile or unresponsive market C lack of eagerness on the part of consumers to subscribe to us 3. External Interference C from investors and their friends and relatives, as well as from government and competitors Legal contract with clearly defined terms and conditions of service as well as relative autonomy of organisation. Ensuring that all licenses, permits, receipts and legal documentation are acquired, as well as regular payment of governmental fees, rates and levies 4. Fierce competition from NITEL, other pre-existing ISPs who are interested in the eastern market Being the first and the best will go a long way in buying public opinion over to our side. Providing better, more efficient and highly reliable service is the best defence of all 5. Fluctuating market and revenue base C inability to meet up to estimated target subscribers 6. Long-range capital realisation C project setup takes too long Diversification, massive publicity, and playing on the public ego (details will be supplied later) Inclusion of more investors as shareholders, bank loans, project launching Proffered Solution 95% of activities and setup handled by in-house team of experts, consultants, and qualified employees at no extra charge Optimism, massive publicity and persuasive advertising, as well as incentives
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Prepared by
Lighthause Communications Ltd.
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