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What is a Virtual ISP?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 04 December 2016
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    2003-2016
    Conjecture Corporation
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A virtual Internet service provider, also known as a virtual ISP or VISP, is a service provider that purchases Internet services from a supplier, then resells those services to customers. This approach is sometimes also referred to as wholesale ISP services. Customers who purchase Internet services from a virtual ISP are granted access to the Internet via one or more of the points of presence, or POPs, that are owned and operated by the supplier.

With a typical virtual ISP arrangement, the provider enters into an agreement with the supplier to generate a minimum amount of business within a specified time frame. In exchange for generating that business volume, the supplier extends the services to the virtual ISP at reduced rates. The provider is then able to set pricing that is still very competitive with the rates offered by other Internet Service Providers, but makes it possible to earn an equitable amount of profit. Some contracts of this type include tiered pricing, allowing the provider to receive services at even lower rates as that minimum business volume is exceeded.

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There are significant benefits to operating a virtual ISP. One has to do with low overhead. Since the majority of the equipment, maintenance, and network access is provided by the supplier, the provider can operate with fewer facilities and a smaller staff. This in turn means that the provider saves a great deal in terms of salaries and wages and employee benefits. The end result is higher profit earned from each new customer that is signed.

One potential drawback to operating a virtual ISP is the lack of control regarding the delivery of service to the clientele. In the event that some sort of issue arises to prevent clients from connecting, the provider is reliant on the supplier to implement a backup program while the problem is resolved. Depending on how well this is handled, the provider may have relatively few losses in terms of clients, or end up with a significantly smaller client base.

In some cases, the virtual ISP markets the services offered transparently. That is, the working arrangement between the service provider and the supplier is readily revealed to potential customers. This is often the case when the name brand of the supplier is well-known and is likely to attract clients to do business with the provider. Depending on the marketing model adopted by the provider, promoting public awareness of the relationship can result in considerable gains in revenue for all concerned. At other times, the operator of a virtual ISP may prefer to private brand the service, a move that is often utilized when the goal is to appear to be the originator of the services rather than an agent.

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