A virtual ISP purchases internet services from a provider and resells them to customers. The provider offers reduced rates for a minimum amount of business, resulting in low overhead and more profit. However, there is a lack of control over service delivery, and marketing can be transparent or private labeled.
A virtual Internet service provider, also known as a virtual ISP or VISP, is a service provider that purchases Internet services from a provider, then resells those services to customers. This approach is also sometimes referred to as wholesale ISP services. Customers who purchase Internet service from a virtual ISP are granted Internet access through one or more of the provider’s owned and operated points of presence, or POPs.
With a typical virtual ISP deal, the provider enters into an agreement with the vendor to generate a minimum amount of business within a specified period of time. In exchange for generating that volume of business, the provider extends services to the virtual ISP at reduced rates. The provider is therefore able to set prices that are still very competitive with the rates offered by other Internet service providers, but allow you to earn a fair amount of profit. Some contracts of this type include tiered pricing, which allows the provider to receive services at even lower rates when the minimum business volume is exceeded.
There are significant benefits to running a virtual ISP. One has to do with low overhead. Because most of the equipment, maintenance, and network access is provided by the vendor, the vendor can operate with fewer facilities and a smaller staff. This in turn means that the supplier saves a lot in terms of wages and salaries and employee benefits. The end result is more profit earned by each new customer that is signed.
A potential disadvantage of operating a virtual ISP is the lack of control over the delivery of service to customers. In case there is some kind of problem preventing clients from connecting, the provider relies on the provider to implement a backup program while the problem is fixed. Depending on how well it is managed, the provider could have relatively few customer losses or end up with a significantly smaller customer base.
In some cases, the virtual ISP markets the services offered transparently. That is, the working agreement between the service provider and the vendor is readily disclosed to prospective clients. This is often the case when the vendor’s brand is known and is likely to attract customers to do business with the vendor. Depending on the marketing model adopted by the provider, promoting public awareness of the relationship can result in substantial revenue gains for all concerned. Other times, the operator of a virtual ISP may prefer to private label the service, a move that is often used when the goal is to appear to be the publisher of the services rather than an agent.
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