The only thing worse than missing the electronic commerce wave of the early 90's was watching your business get smashed down as it surged past this past two years, dredging a thousand mergers and acquisitions in its wake. Lately, one small ISP after another has found itself drowning in the "consolidation wave" surrounded by acquisitive sharks, in a shrinking pool of customers, or pulled under in tidal eddies of churning turnover.

In this atmosphere, the dream of "making it big" has given way to the dream of "selling off big". International ISPs, telephone and cable companies struggle for domination on sometimes-global scales, fueling their growth with aggressive acquisition strategies, making small ISPs attractive targets for takeover. Smaller regional players have been acquisitive themselves, leaving the smaller ISPs who choose to remain independent to fight over the small streams of market share left to them. Worse still for small ISP owners is the advent of the "free" ISP, a marketing model that cannot be funded on the slender speculative capital available to most start-ups. The only real option is to find a large niche market to serve, or to sell off one's subscriber list while asking prices are still high.

Those who can solidly define their particular niche remain a force within the industry - but their business models have had to drastically change the past few years. Those who have succeeded have done so by picking a core competency and sticking to it -by finding a hidden need to fill, and in some cases, by completely transforming their business model.

Sometimes this transformation has come naturally. At Ability Online (http://www.ablelink.org/), the core audience is special needs children. Ability Online forms a core community that strengthens and cements its bond with these families by providing support and educational services. Growing from a small Bulletin Board Service (BBS) in late 1991, the service has attracted national support and attention. Since that time, Ability Online has grown to become a barrier-free online resource for one of North America's largest cities, offering local, and network newsgroups that have been abandoned by the more commercial BBSs and ISPs in favor of the Usenet. A large selection of computer files and software dedicated to special needs is available for download, including teaching programs, medical news, resource archives, ASCII to TDD programs, speech programs designed for use with a voice synthesizer, record keeping utilities for tracking medications and doctors visits, and programs that customize Windows® for persons with disabilities. Ability Online recognizes that when there is a disability or illness that the entire family is affected, so there are conferences for parents and siblings as well. This dedication to the core audience comes naturally to Ability Online, a non-profit charitable organization founded in the culture of support for its special-needs community. The change has been more in the technology used to access the service than in the service itself - a strong core idea has held solid through a decade of growth and change.

Most other "niche ISPs" now find themselves competing on slender differences, however. Regardless of the "branding" or the hype in their advertising, the bottom line to customers has been a dial-up connection with pretty much the same set of bells and whistles. One exception might be coming in the high-speed arena. Look Communications (until recently, known as "Internet Direct", a large ISP in North America recently merged with a wireless television company) is in the process of rolling out a new form of high-speed Internet access via wireless cable connections.

Smaller ISP owners do not have access to high-speed technologies provided by telephone or cable companies, and are not in Look's enviable position of being able to develop their own national broadband network. ISPs are increasingly turning to the "Application Service Provider" and "business to business" models to fill niche markets left open by larger, slower-moving companies who provide the bulk of "Internet utility" services.

A good example of this kind of re-invention is Hostopia (http://www.hostopia.com), a web hosting solutions provider that offers turnkey packages to ISP owners. CEO John Nemanic, one of the founders of Internet Direct, on the cusp of a merger with Look Communications, saw a need for secure, stable, fast and simple resale web hosting service. Seizing the opportunity, he broke out on his own once again to re-enter the entrepreneurial marketplace.

"I've always been excited by the development stage of business," says Nemanic. "The Hostopia.com idea presented a challenge to move 'beyond the box'. After the merging Look Communications and Internet Direct, we had established the foundation for one of North America's Internet infrastructure. Leaving when I did allowed me to move back into my own core competence, back into the entrepreneurial marketplace where things move faster and more dynamically, where I felt more at home."

The idea behind Hostopia.com was to establish a business-to-business application service provider whose main focus was to serve the web hosting needs of other ISPs. By setting up server farms maintained as turnkey solutions, the Hostopia.com service frees up smaller ISP owners and small to medium companies from the time, hassle and headaches involved in creating robust, fast web solutions for their corporate and dial-up customers.

"Our people have a lot of hands-on experience with ISPs," says Nemanic, who partnered with brother Franc Nemanic and Bill Campbell, another of the founding members of Internet Direct to create the new company after the Look-Internet Direct merger. "We were active in building ISP industry associations, so we knew from experience that most small ISP owners and corporations don't have the time or the budget to build bullet-proof industrial-strength web servers. We offer them an 'out of the box' solution, one that can be virtually hosted on a fully managed outsourced or licensed basis, depending on their individual needs. Our team, our solution, frees their IT managers to focus on their own areas of expertise."

The recent e-commerce revolution turned up the pressure on ISPs to create solid, dependable web platforms for their commercial customers. Many of these customers are entering the online environment for the first time. Speed and simplicity are their core concerns. ISPs are often caught struggling to keep pace with demand, and to upgrade and enhance their services fast enough to keep pace with the raging speed of Internet development.

"We've grown past the time when customers accepted a few weeks or months development time," says Nemanic. "If you aren't ready for growth in the e-commerce sector, you risk being swamped by demand. It's critical that ISPs have the capability to instantly scale their web hosting services to meet the challenges ahead. We saw an opportunity there, and took advantage of it."

In order to survive and thrive in the consolidation wave, one must not only be creative, but fast to move on market opportunities. "We've done well because we never frozen in the face of change," says Nemanic. Our privately branded website operating system allows ISPs to protect their identity and leapfrog the technical development wall. Our speed and creativity can't be matched. Our turnaround time is incredible versus one at a teleco-hosted or national ISP, and some don't even offer business-hosting services. Hostopia.com clients (Hostopians) can implement an e-commerce-enabled site in days."

The ability to respond to ever-changing demands is vital in the Internet industry. "As a business, we've been forced to reinvent ourselves time and time again. That's the nature of this business," says Nemanic. "It's one reason I'm still optimistic that there is still a pot of gold at the end of the rainbow for Internet entrepreneurs who can take on the challenge. The large companies will continue to grow, to gobble up markets and to take over the routine, daily connections, freeing the creative energy of 'net pioneers' to create new businesses, processes and models. It's a very exciting stage in the growth of this industry."

As the Internet continues to grow and dynamically change, there will be many more opportunities for Internet entrepreneurs to innovate, develop and grow their businesses. The challenge is to remain flexible, and stay open to creative changes in your business model. Successful "net-prenuers" will be those who adapt to the wildly changing needs of customers from one week to the next. Flexibility, creativity, speed, service, and simplicity will be the core values that will build successful Internet service and application service provider business well into the new century.