Customer Service Gets Wired

P> In the Internet access world, customers used to take whatever service they could get, mainly because they didn't know what to expect.

That's the key: customer service. The consumer backlash coupled with serious competition from AT&ampT and MCI has given Internet service providers a wake-up call.

At least two companies -- Digital Express Group (DIGEX) in Greenbelt, Md., and Herndon, Va.-based PSINet Inc. -- have changed their business plans in past weeks to reflect growing customer expectations. Customers want what they pay for in Internet service, just as in newspaper delivery or telephone connection.

Part of the change also hinges on access providers growing to yet another level. Many of the companies have pushed aside their entrepreneurial founder to make room for a more business-savvy leader.

For DIGEX, that shift started when Christopher McCleary, a former executive of American Mobile Satellite Corp. stepped in as CEO, and Doug Humphrey, the company's founder, stepped into a research and development role. "We are not just a technology company. Now we are a customer acquisition and retention company," said McCleary, who wants to take the company public this year.

DIGEX previously spent much of its money on building an infrastructure, but now that the modems and lines are in place, the company can focus on really doing business.

Earl Galleher, vice president of the Internet Services Product Business Unit at DIGEX, admitted that some customers must wait 15 minutes for service. That will change in the next 90 days, he said.

DIGEX next year will hire about 100 new employees, with 80 percent in customer service positions. McCleary said the new system will have "99.999 percent reliability."

Although DIGEX has mostly corporate accounts, service providers with consumers also are paying more attention.

PSINet said it has fundamentally changed its strategy to face stiffer competition. In the third quarter of 1996, PSINet plans to introduce a new consumer service for experienced Internet users.

"The service will be designed for those customers who demand high-speed... connections, which are always available, and for those seeking the best quality Internet hardware, software and applications," said William Schrader, CEO of PSINet. "These customers require security and...customer support, and are willing to pay for it." Beta testing for the new service will start in June.

PSINet's new service comes on the heels of the AT&ampT offer of free Internet access for five hours a month to its long distance customers and $19.95 a month for unlimited use. MCI matched the offer. After the AT&ampT announcement, PSINet stocks, along with most other Internet service providers, plummeted.

By providing high-quality customer service for advanced users, PSINet hopes to stay out of the direct line of competition with the telcos. "We believe [those companies'] services are destined to become... commodity offerings with lower margins and are therefore best left to AT&ampT, the [Baby Bells] and the traditional on-line providers," said Schrader.