Smaller ISPs have captured and are holding onto around 2 million broadband customers - some 30% of UK businesses and 5% of households - in a market worth over £1 billion.

Some £400 million of this turnover comes from consultancy, design and the provision of bespoke solutions.  What's the secret of their success?

Smaller ISPs concentrate heavily on high quality technical support, personal service and customised offerings to keep their customers happy - that’s a key finding in research published in January by Ofcom.

The report focused on providers with fewer than 30 employees or with a small number of customers and it offers a useful insight into how small and agile ISPs keep their edge. 


KEY RESEARCH FINDINGS
 
The market for niche ISPs

• Broad range of services from connection to consultancy
  686 niche ISPs provide hosting, connection and other services to 30% of UK enterprises (around 1.3 million businesses) and 5% of households (around 600,000 residential customers)
• Niche ISPs turnover an estimated £1.15billion, of which £740million is from providing connections only
• 20% of customers are residential and 80% business; Niche ISPs target businesses with fewer than 30 employees

Services offered

• 33% provide hosting and other services such as consultancy, bespoke solutions, website design and management, and domain registration
• 11% provide connections and other services
• 56% provide all of these services

Profiling niche ISPs

• 73% have fewer than 10 employees, 83% fewer than 20 and 90% fewer than 30, split 50/50 between technical and administrative
• 61% have a single location and collectively turn over less than £1 million
• Most are in England, with 49% in the South and 15% in London 
  

WHAT'S THE ATTRACTION OF NICHE ISPS?

Most of these smaller ISPs believe their customers are looking for a higher quality of customer service: reliable technical support and a customised service that provides a total solution to their business needs. 
 
More than half the sample claims their approach offers personalised not standardised service provision and gives them a competitive advantage over larger ISPs. This seems to hold true across different industry sectors and indicates the value to customers of a truly personal service.


HOW DO THEY DO IT?

Here's what some of the ISPs had to say:

"We spend more time on the phone if necessary; we provide a more technical service, 24 hour monitoring and we’re much more proactive in resolving issues."

"We’re able to tailor our services and we can offer a more personal customer experience."
 
"We provide UK support by qualified engineers not a call centre. A person answers the phone. We apologise for mistakes when we make them.  Even at midnight we can provide rapid response to customers."

As a group, the smaller ISPs claim they have clear advantages over their larger competitors and they are successfully exploiting a substantial demand for personal service even in an industry totally driven by IT systems.

The challenge of providing high quality, personalised services in a mass market will have to be tackled by larger service providers if they are not to lose custom to their smaller but increasingly adept competitors.