By most accounts, mom-and-pop Internet access providers such as Rockbridge Global Village, which serves but 1,500 subscribers in the Shenandoah Valley, should be extinct.

Giants such as America Online Inc. and AT&T WorldNet now reach every corner of the United States and are ever-present on TV ads and in computer stores, offering flashy deals the little guys could never match. Year after year, industry analysts have predicted that the larger players would drive smaller competitors out of businesses or, at least, buy them out.

Instead, Rockbridge Global Village and other small independent service providers, those with 1,000 to 15,000 subscribers and servicing up to 10 area codes, are not only surviving, they are thriving.

Run by moonlighting doctors, bookstore owners, clergymen, retirees and, of course, computer wizards, several of the companies report annual profits of millions of dollars. There are more than 7,100 Internet service providers (ISPs) in North America, a 41 percent jump from a year ago. The number of providers is expected to swell to 10,000 in the next two to three years, according to various academic and industry estimates.

In many respects, providing Internet access is the corner store of the new economy: It is a business that requires little sophisticated expertise, only a modest investment, and is almost guaranteed to make a healthy profit. These entrepreneurs are the little-known success stories in a brave new world where other dot-com companies continue to lose millions of dollars each day despite having stratospheric stock values.

"I read about all the other Internet companies--that three out of four fold and how it takes five years before you make a profit. In our business you make the profit right away," said Tom Ahnemann, co- founder of Rockbridge Global Village, who in the past few months has fended off three buyout offers for the company.

Shane Greenstein, an associate professor at Northwestern University's Kellogg School of Management who has studied the industry since its birth, said the ISP business appears to be shaping up like the auto repair industry, with national services such as Midas Inc. and Sears, Roebuck and Co. prospering alongside neighborhood mechanics.

"I had no idea these small outfits were still going to be around in the year 2000," Greenstein said. "I swear I thought like everybody else that this whole industry was going to consolidate."

In the past few years, even as AOL's subscriber base has ballooned, its market share has shrunk to 43 percent from nearly 50 percent, the research firm International Data Corp. said. A significant portion of those AOL subscribers went to local service providers.

Like the local mechanics, the small service providers' secret to success has been old-fashioned personal service. "The small guys have managed to replicate something the national firms cannot, and it's got to be handholding and a friendly smile," Greenstein said.

Extraordinary customer service is especially important today, analysts say, because most of the people living in the 50 million American households not yet online are less computer savvy than those whose homes already are wired. Many small providers said they make house calls to install the Internet software, provide training and troubleshoot problems for technology neophytes.

And small-town users said they like knowing that if they have trouble, they can call the company president at any time.

"My wife and I answer the phones 24 hours a day," said John "Zeke" Brumage, owner of Zeke's General Store Internet Services in southeast Arizona. "It rings at the house and we call-forward to the cell phone when we're traveling."

Ed Fineran, 35, president of Atlantech Online, a business ISP in Silver Spring with 6,100 subscribers, said good service cannot be done on a large scale. "When our customers call up, we typically know them by name," he said.

The companies' success may also be a testament to a desire for local anchors in a world where chains such as Starbucks Corp. and McDonald's Corp. dominate city blocks. In Florida and Arizona, for example, several consolidators that have been snapping up small ISPs have chosen to keep the original names and "storefronts" to give the illusion that subscribers are receiving service from a local provider.

Lee Merrill, an architect in Lexington, Va., said the main reason he has stuck with Rockbridge Global for his Internet access is because he believes it "helps bind the community together." The service's main page features links to local government agencies and nonprofits as well as an "electronic Main Street," featuring stores in the Rockbridge County area.

The county is "quite small physically but quite active in terms of community groups, and it's astounding the speed with which they have made home pages and gotten linked," Merrill said, adding that Rockbridge Global "has helped tremendously in that regard."

To establish Rockbridge Global Village, Tom Ahnemann and Dusan Janjic, computer workers at Washington and Lee University in Lexington, scraped up all they needed by taking out second mortgages on their homes in 1996. They spent $7,000 and made it back their first month.

That's an experience duplicated around the country. Brumage, 57, and his wife, Ellen Serafini, started their service with $3,000 from their savings and credit cards. They bought a single computer and four phone lines and began hawking Internet service, along with bags of ice and other essentials, in their town's only shop. The venture was so successful--1,000 customers to date--that now the couple sells only Web access.

"I made friends with this college kid and he got me all lit up and excited about how connected people would be in the future," Brumage said. "I wanted to be a part of that."

Tom Savage of Irving, Tex., cashed out the 401(k) retirement fund he had built up over 17 years as a customer service agent for Motorola Inc. and, on a whim, joined his brother-in-law to start an access provider in the Dallas-Fort Worth area. Last year, Digital Highway Communications Inc. hit 2,500 customers, a trifling number when compared with industry leader AOL's 23 million, but nonetheless enough to bring in more than $500,000 a year in revenue.

Many ISPs have fewer than a dozen employees, and the president often performs a range of jobs, such as negotiating deals with telephone companies, answering the customer support lines and sweeping floors. A bare-bones service requires only one fast "server" computer, routers to direct data traffic, and a few phone lines.

In the past few years the business has become even easier to jump into as telecommunications companies including UUNet Technologies Inc. and Cable & Wireless PLC have begun offering what International Data analyst Steven Harris calls "ISP in a box"--renting cable and customer support services so people can create virtual networks. "Just anyone in their garage can start their own ISP nowadays," Harris said.

The success of small ISPs does not spare their owners from worries about looming threats to their business. The challenges include state- of-the-art technologies: broadband lines that promise speeds thousands of times faster than normal telephone dial-up service; wireless and satellite services; and the wave of free access offers from such trusted names as Yahoo Inc. and Juno Online Services Inc.

Some analysts believe these challenges mean that further consolidation in the access industry is inevitable. "The smaller providers who are merely providing a dial-up connection for $20 a month and have no additional value are going to be in trouble with the onslaught of free ISPs," said Zia Daniell Wigder of Jupiter Communications Inc.

But many owners of small ISPs shrug off those worries. Some said that being a smaller service is an advantage because their firms are less bureaucratic and can maneuver more quickly with shifts in technologies--to offer high-speed DSL service before the larger access providers, for example. But a growing number have started shifting their business from the access market to building software in anticipation of this new competition. The small ISPs have focused on creating and hosting e-commerce sites for neighborhood companies. Like managing an ISP, Web programming has become so automated it is more of a trade than an engineering feat, people in the industry said.

Some entrepreneurs said that because AOL and its competitors have grown so large in the past year, an "us versus them" mentality has developed. More than a few local businesses have picked up customers by slamming the large providers. Lynchburg.Net in Virginia even devotes part of its Web site to this: "After using America Online, you might expect that: 1. Raising charges 20% while reducing your online time is normal. 2. All Internet Providers have poor customer support. . . ."

For many small owners, the ISP business is not just about making money, but about having a role in the digital revolution of the 21st century.

Digital Highway Communications' Savage, who in mid-January sold his Dallas-Fort Worth company to a mid-sized ISP for $600,000 in cash and stock, said he plans to do it all over again, investing in a new service for rural Texas.

"I was very nervous because I had never stepped out to do anything like this before," he said of his four years of service. "I had an 8- to-5 job and I knew I was going to have a paycheck every week. I knew I had a good retirement."

But, he added, "I would have never gotten the chance to say I was a part of building the Internet. And that's something more important than stability."

Little Guys Go Big Guns

While big Internet service providers have more than half the U.S. market . . .smaller ones continue to proliferate, helping to push up the total number of ISPs this year by 41 percent.

Number of Internet service providers in Northern America

2000: 7,100*

*As of Feb. 1

SOURCES: International Data Corp., Boardwatch magazine

Reproduced with permission of the copyright owner. Further reproduction or distribution is prohibited without permission.

Subjects:
Article types:	News
Section:	A SECTION
ISSN/ISBN:	01908286
Text Word Count	1667

Internet service providers' market share

 America Online                                    40%

   MSN                                                4%

   EarthLink                                          4%

   AT&T WorldNet                                      3%

   MindSpring                                         3%

   Big ISPs                                          54%

   Small                                             26%

   Mid-size                                          21%

   NOTE: Percentages were rounded.