Internet Service Provider (ISP) Definition

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What Is an Internet Service Provider (ISP)?

The term Internet service provider (ISP) refers to a company that provides access to the Internet to both personal and business customers. ISPs make it possible for their customers to surf the web, shop online, conduct business, and connect with family and friends—all for a fee. ISPs may also provide other services including email services, domain registration, web hosting, and browser packages. An ISP may also be referred to as an information service provider, a storage service provider, an Internet service provider (INSP), or any combination of these three based on the services the company offers.

Key Takeaways

  • An Internet service provider (ISP) is a company that provides web access to both businesses and consumers.
  • ISPs may also provide other services such as email services, domain registration, web hosting, and browser services.
  • An ISP is considered to be an information service provider, storage service provider, Internet network service provider (INSP), or a mix of all of them.
  • Internet use has evolved from only those with university or government accounts having access to nearly everyone having access, whether it’s paid or free.
  • Access has gone from dial-up connections to high-speed broadband technology.

Understanding Internet Service Providers (ISPs)

Internet service was originally limited to government agencies and specific university departments. The technology was developed to provide access to the general public through the World Wide Web in the late 1980s. Initially, consumers were able to gain limited access through a few ISPs—America Online (AOL) being one of the most recognized names at the time—that used dial-up connections using a phone line.

The number of ISPs increased to several thousand during the mid-1990s and the boom was on. As the options for connectivity increased and speeds moved away from slower dial-up connections, the Internet economy was born. Providers developed more advanced technology, allowing customers high-speed access via broadband technology through cable and digital subscriber line (DSL) modems.

Behind all of this was a multi-layered web of connections. Local ISPs sold access to customers but paid larger ISPs for their own access. These larger ISPs, in turn, paid even larger ISPs for access. The trail leads to Tier 1 carriers that can reach every network access point without having to pay for access. These Tier 1 companies own the infrastructure in their region.

Internet service providers provide their customers access to the Internet—plain access providers just handle the traffic between the individual and the Internet as a whole. But there may also be other services bundled in depending on the customer’s location and availability. Some of these services include:

  • Email services
  • Web hosting services
  • Domain registration
  • Browser and software packages 

As of April 2021, approximately 93% of American adults use the Internet and 77% of American adults have broadband Internet service at home.

Special Considerations

Consumers and businesses are accustomed to the idea that they should be able to connect to the Internet from anywhere—whether at home or while sitting in a local coffee shop. In order to deliver connectivity at high speed, companies have to invest in expensive infrastructure that includes fiber optic cables.

Because of the high cost of investment, Tier 1 ISPs often appear like a monopoly in their regions. So a specific company may appear to have near or total control of the market in a particular area. In the U.S., companies may appear to operate in an oligopoly rather than a monopoly, where two or more companies work together to achieve market returns. This idea is reinforced by the fact that some of the major American ISPs got there using infrastructure they inherited from the original telecom monopoly that was Ma Bell.

Current Tier 1 ISPs continue to invest in infrastructure and they may well be the only players in that market until new technologies that don’t depend on fiber in the ground emerge. Think the likes of Starlink, an entity inside SpaceX, founded by Elon Musk, which is developing a low-latency, broadband internet system that aims to meet the needs of consumers across the globe, enabled by a constellation of low Earth orbit satellites. The ongoing demand for faster speeds and an improved Internet experience means that some of the biggest ISPs have begun investing heavily in 5G wireless technology.

Google Fiber

Others have tried to enter the Tier 1 ISP market and have met with mixed results. Alphabet, Google’s parent company, ran Google Fiber as part of its Access Division—an ambitious project to lay a new network of fiber across the United States—but this plan was scaled back in 2016.

For a while, it looked like Google Fiber would be available only in a limited number of cities. However, in July 2020, the company announced it was partnering with the city of West Des Moines, Iowa, to provide the city’s residents and businesses with gigabit Internet service. This represents Google Fiber’s first expansion in four years.

While it’s too early to tell if this represents an overall trend that will see Google Fiber in more regions across the U.S., West Des Moines joins 19 other regions where Google Fiber ISP services are available. Some of the areas include Atlanta, GA; Austin and San Antonio, TX; Huntsville, AL; Orange County, CA; Charlotte, NC; Nashville, TN; Denver, CO; Chicago, IL; and Salt Lake City and Provo, Utah.

Examples of Internet Service Providers

Many of the largest ISPs are also large telecommunications companies that provide a wide array of services. For example, in addition to data and broadband Internet services, AT&T (T) provides local and long-distance telephone services, managed networking, telecommunications equipment, and feature film, television, and gaming production and distribution.

Verizon Communications (VZ) is another ISP that has a diversified range of services. The conglomerate offers local and long-distance voice, as well as broadband video, data center and cloud services, and security and managed network services.

To help low-income families and seniors handle the cost, some ISPs offer special programs. The government also opened an Emergency Broadband Benefit (EBB) program on May 12, 2021, to provide help to families to get these services.