ISPs @Risk

Consumer Alert

MindSpring acquires Netcom. Cable & Wireless purchases MCI One. RCN buys Erols. Welcome to the ISP mating game, in which big business wins and customers sometimes lose. Last year, more than 160 of an estimated 6000 ISPs worldwide were acquired, and the pace is picking up. Most of these were small local or regional providers, but national services were also purchased, raising the stakes considerably: The five biggest deals affected nearly 1.5 million customers.

What can go wrong when ISPs merge? Take your pick: poor connections, billing difficulties, changed e-mail addresses and Web site URLs. When PC World Online asked readers whose ISPs had been bought to discuss their experiences, we received dozens of complaints citing these problems and many others. While it's impossible to tell what percentage of customers walk away mad when their ISP is bought, it's clear that changes aren't always for the better.

Bad Performance, Worse Support

Many readers complained bitterly about connection problems following an ISP buyout, citing persistent busy signals, sudden disconnections in the middle of file downloads, and decreases in connection speed of 50 percent or more. Harold Gunn of Bridgeton, New Jersey, reports that his connection speed with Sprynet plummeted from 28.8 kbps to as low as 12 kbps after MindSpring acquired Sprynet from America Online. In addition, Sprynet's previously announced plans to upgrade to 56-kbps service by the end of 1998 were shelved. The service had improved by early spring, but Gunn was still waiting for the inception of 56-kbps service.

Customer service woes annoyed users even more. The MCI account of Chicago attorney Mark Bauer was sold to Cable & Wireless USA in one of last year's largest deals. Bauer encountered constant busy signals when he tried to connect to the service and faced similar problems when he sought tech support. When he finally got through, he says, he waited on hold for 18 minutes before getting a customer service rep. "They said, 'It's a problem on your computer,'" Bauer recalls. "How can a busy signal be a problem on my computer?" He managed to reach a supervisor, who promised to look into the problem and call him back. When that call didn't come, Bauer switched to MindSpring.

Bauer was among a large contingent of former MCI customers who contacted PC World Online about their experiences--good and bad--following the buyout. But evidently, Cable & Wireless itself isn't too pleased about the transaction: It recently sued MCI, alleging (among other charges) that MCI failed to turn over promised customer service and support resources.

That lawsuit might help explain complaints about Cable & Wireless's billing. To complete the sale rapidly and satisfy regulatory requirements for its merger with WorldCom, MCI agreed to continue billing its former customers until C&W could set up its own billing system. The lawsuit accuses MCI of failing to do that adequately, and some customer complaints we received seem to support the allegation.

Valerie Bowen of San Antonio didn't receive her first Cable & Wireless bill until several months after the takeover. The bill was a shocker: $141, instead of the $20 per month she'd been paying for unlimited access. Cable & Wireless told her it was merely continuing a new billing plan implemented by MCI just before it sold out. Bowen says she was never notified of the change. She wound up paying nearly $300 for her three-month tenure with C&W--and that was after negotiating a credit for that initial $141 bill. Bowen has since switched to a small local provider and says she's willing to accept her new ISP's slightly slower connection speeds in exchange for a stable, flat-rate billing plan.

Cable & Wireless declined to comment on the MCI lawsuit, but senior vice president Art Medici acknowledges that "we were going through some growing pains." He says C&W plans to spend $670 million to upgrade its network and is committed to improving the current level of service.

Sorry, Wrong Address

If you've ever moved your office, you know the aggravation and expense that accompany an address change. You have to notify customers, revamp business cards and stationery, and deal with any number of unexpected problems. Changing ISPs can be equally disruptive.

Contrary to an assertion in this story, customers of CTA, a California-based ISP, were not forced to change their e-mail or Web site addresses when the company was acquired by Mountain States Communications (www.mscomm.com). PC World regrets the error.

Donna Barron, who manages the Web site for Hollywood, Florida­based Arco Computer Products, still shudders when recounting what ensued after Cybergate acquired her company's ISP, Netrunner. Customers said they couldn't find certain pages she knew she had posted. It turned out that Barron now had two sites: the new one on Cybergate, where she was posting updated material; and the old one on Netrunner--now inaccessible to her--where search engines continued to direct customers. It took weeks to straighten out the mess. Barron lost several days wrestling with the problem, and believes it may have cost Arco tens of thousands of dollars in business.

Analysts say most ISPs that acquire other services attempt to purchase the old domain name so customers can keep their existing e-mail addresses and URLs. Sometimes, however, the seller wants to keep the domain name, perhaps for an entirely different business. In other instances, the buyer simply may not be willing to spend the money necessary to maintain the old domain name and service its e-mail. Either way, if your e-mail or URL rug gets jerked out from under you, you're out of luck. The two best ways to assure yourself of a reasonably permanent address are registering your own domain name and setting up a free Web-based e-mail account with an established service like Yahoo or HotMail.

Consolidation to Continue

The urge to merge seems to be stronger than ever. Tom Millitzer, president of New Commerce Communications, which brokers ISP acquisitions and tracks publicly reported ISP deals, says some 70 ISPs were acquired or merged in the first three months of 1999, compared to about 160 in all of 1998. From a business standpoint, bigger is better because larger ISPs can lower costs through economies of scale that are unavailable to small services.

When large ISPs invest their savings in their networks, consolidation can result in improved service. In PC World Online's survey, numerous respondents--including some Cable & Wireless customers--said they were satisfied with the service from their successor ISP after their original ISP sold out. Alex Coimbre, a pharmaceutical research consultant based in Clayton, North Carolina, says that he received plenty of advance notice about the MCI­C&W changeover. He finds connecting to C&W easy and fast, and says that C&W's technical support is even better than MCI's.

The other good news is that, despite the shakeout, consumers still have plenty of choices. Even as many older ISPs are gobbled up, new ones appear. MCI and PSI will soon introduce new services, for example.

Residents of most cities and suburbs still have ten or more ISPs vying for their business, according to International Data Corporation analyst Jeannette Noyes. An additional indication that competition is alive and well in the industry: The average cost of unlimited service has remained stable at about $20 a month for the past couple of years.

But continued consolidation may eventually reduce the number of providers, especially as demand increases for high-speed technologies such as cable and DSL, which require multimillion-dollar investments. "Mom-and-pop operations simply aren't going to be able to step up to the plate," predicts Forrester Research senior analyst Bruce Kasrel. He anticipates that small local services will have an even tougher time competing when large telecommunications companies start to bundle cable TV, telephone service, and high-speed Internet access into attractively priced service packages.

Stay or Go?

So what should you do if your ISP is bought? Most experts recommend giving the new service a chance. Disruptions that occur while the old network is being absorbed by the new one are often only temporary, and the growing pains may well be worth enduring, especially since the alternative is starting over with a new e-mail address. If you do decide to ride out the transition, be sure to consult the new owner and confirm that you're both on the same page about your billing plan.

On the other hand, if service goes south and shows no signs of improving after 30 to 60 days, don't be afraid to take a hike. You'll find plenty of contenders for your business. But look before you leap. Inverse Network Technology's monthly ISP survey is a good source of comparative information about connection rates for 25 major services. Similarly, PC World provides an annual ISP report that ranks 20 large national and regional ISPs. For the latest report, see "Good Providers: The Best National and Regional ISPs."

If your business depends on a stable e-mail address and URL, consider registering your own domain name. Sure, you'll have to change your e-mail address and Web site URL this time around, and the process might take several days. But you'll be doing it at your own convenience, not under the gun. Your domain can be set up at any ISP (surcharges usually run around $5 or $10 a month). But if your service provider is bought, or if you decide to switch providers, you should be able to set up shop again quickly, with no visible changes to your digital letterhead. Outsiders will have no inkling that you've moved.

Who should take these precautions? Just about anyone who maintains a Web site or e-mail address for business--there's just no foolproof way for you to tell whether or not your ISP is on the block. And midsize to large providers are as likely to acquire other services as they are to be bought.

The only certainty is that consolidation will continue, and that a little bit of preparation now can save you a lot of grief later on. If you're lucky, your service may get better. If not, you can always do what smart consumers have done through the ages: Take your business elsewhere.