What Is an ISP and How Internet Service Providers Work

A young white woman clicks on a holographic screen image

No doubt you’ve heard the term “internet service provider,” or ISP, at some point in your digital life. But like terms such as LAN, virtual private network (VPN), port, IP address, etc., it may have gone in one ear and out the other. Most of us are fine not really knowing what these things are so long as our internet works.

But then there’s those times when the internet suddenly does not work. If you’re reading this on your phone’s data plan because your home internet went out again, you know what we mean.

Suddenly you want to know who is responsible for what and what kinds of service you are actually paying for.

Defining Internet Service Providers

An internet service provider, or ISP, is the industry term for a company that provides access to the internet. Some nationally recognized ISPs include AT&T, Verizon, and Xfinity, and likely there are several regional ISPs local to you.

The term and the abbreviation are interchangeable, so if your buddy says, “I’m thinking about switching ISPs,” they’re referring to their internet service provider.

Your internet service provider opens the vast, crazy, beautiful world of the internet up for your exploration on your desktop or laptop. Even if you purchase a top-of-the-line computer with a built-in modem and router, without a service subscription from an ISP, you may find yourself relegated to a built-in computer game of solitaire.

While your phone’s SIM card allows it to use data over the phone network, most other devices such as tablets, laptops, and game consoles will connect to the internet through a network that is provided by an ISP.

Think of it this way: An ISP provides the internet to your home or office the way a power company provides electricity.

You likely get online by connecting to a Wi-Fi network. The physical “home” of that network is the router, that little box the internet company gave you that probably sits near a cable or phone jack coming out of your wall. Just like your microwave can’t heat up your baked potato without electricity, your router can’t give you internet access without a connection to an ISP.

How do ISPs work?

Your internet service provider produces results so quickly — often in milliseconds — that you would never imagine all the processes that go on “behind the scenes,” as it were.

ISPs assign internet protocol addresses (IP addresses) to every device signed up for their services. Your IP address allows websites to know where to transmit requested data; it’s not unlike how the post office uses your home address to deliver your mail. ISPs also work by providing up-to-date network infrastructure and routing information for your local area network (or LAN, the technical term for your home network).

Most ISPs also provide domain name and web-hosting services, and many provide email services as well. Internet service providers are the hubs of internet data; they dole out data capacity to subscribers and are responsible for the speed at which your internet connection works.

Examples of ISPs

Although the types of online connection options Internet Service Providers utilize have changed and evolved since the early ages of the Internet, there are only a few that are used by most customers. For example, gone are the days of dial-up internet services.

(Nonetheless, the dial-up sound will forever be etched in the memories of older generations. If you know, you know. Rest in peace, dial-up internet service.)

Modern connections made available by internet service providers include:

Cable Broadband Connection: Cable broadband connects to the “fiber cabinet” in your modem via coaxial cables. This is one of the most efficient and fastest connections provided by ISPs. Cable broadband connections work anywhere from 60 Mbps (megabits per second) to 1 Gbps (billions of bits per second). Any connection above 100 Mbps is considered a super fast connection speed.
Digital Subscriber Line (DSL): A digital subscriber line (DSL) works through a modem and telephone landlines. However, in contrast to the archaic dial-up internet service, you can still use your landline to speak while accessing a DSL connection. DSL speeds vary based on the internet service provider used and can be impacted by the distance from your device to the router you’re using. Typically, DSL connections can range anywhere from 6 Mbps to 1 Gbps.
Fiber Optic Broadband: Fiber optic broadband, or “fiberi” uses fiber optic cables to attach to the “fiber cabinet.” These cables can send data as fast as 70% of the speed of light. Typically, fiber internet connections run at about 940 Mbps, with the capability of upgrades to run faster. If you live in an area that experiences a high rate of power outages, fiber optic broadband can lessen the chances of your computer equipment shorting.
Mobile Broadband: You may be thinking, “I don’t really need an ISP — I mostly use the internet on my phone, or I can use my phone as a hotspot.” Well, in this case, your phone carrier is your ISP. Mobile broadband is just as the name implies — an internet connection via your smartphone. Mobile broadband continues to grow, with 5G (5th generation mobile network) replacing slower mobile connection capacities for most phone service providers. If you use a mobile hotspot to connect your laptop to the internet, you’re utilizing a mobile broadband connection.
If you actually purchasing internet through your mobile carrier, you will typically get a gateway that will allow you to connect home devices to the internet without using your phone’s hotspot, meaning you don’t have to be home for people to use the internet.
Wireless Broadband (WiBB): As the name implies, wireless broadband connects wirelessly. While cable, fiber optic, and even mobile broadband will use a wire or cable that is physically connected to your house, wireless broadband uses towers that send signals to a receiver or dish on your home. Wireless broadbands can be either stationary or mobile. ISPs usually make wireless broadbands widely available and accessible over a large area of coverage.

Popular ISPs

According to Broadband Now, as of 2022, there are 2,854 internet service providers in the U.S. However, not all ISPs are created equal — a small, locally-based internet service provider may not be equipped to give you the coverage and connection you need. Well-known, popular ISPs often earned their reputations because they have the budgets to upgrade their network infrastructures and allow you to enjoy high-speed internet connections. Here’s a list of ISPS with some examples of the most popular companies:

AT&T Internet
Century Link
Comcast Xfinity
Cox Communications
T-Mobile Home Internet
Verizon Fios

Choosing an ISP

It’s vital to weigh the benefits and drawbacks of each ISP in your area before selecting one that’s perfect for your needs. Some of the most important points to consider when choosing an Internet service provider include:

What ISP fits your budget? The price point of different ISP packages can vastly differ. You shouldn’t have to overspend on an internet service provider that doesn’t meet your cost requirements. Many ISPs offer promotions that last six or 12 months, so make sure you can afford it when the higher rate kicks in later.
What’s the bandwidth capacity? The bandwidth of an ISP is the capacity it has to transmit data, usually measured in Mbps or Gbps. This limit depends on the service package you purchase. Oftentimes the packages are named for their bandwidths, e.g., “10 Mbps,” “100 Mbps,” “1 Gbps.”

If you’re using your internet to watch streaming platforms, to connect to remote work meetings, to dive into heavy research, or to work remotely, you may want to consider a higher bandwidth purchase.
Quality of service. Research all available options before you decide. Even the larger ISPs may have problematic connections in some areas. If you live in a wooded or isolated region, or if your neighborhood is constantly under construction, you may want to check the local ISP reviews for connectivity red flags.
Type of connection. Discern which type of connection would work best for your home or office, and determine which ISP has those options available in your area.
Customer service. Occasionally, your neighbors may recommend a regional provider over a national one because they prefer the customer service experience.

ISP Tiers

It’s also a good idea to determine which “tier” your ISP belongs to. Internet service providers are categorized into three tiers:

A red sign reading “Internet” outside an internet cafe

Tier 1 ISPs

Tier 1 ISPs are the cream of the crop of internet service providers.These ISPs can access all internet networks via settlement-free peering. Settlement-free peering is an agreement between networks that allows free-of-charge network exchange and access.

Tier 1 designates networks with the technical and framework capabilities to easily exchange with other network providers. Tier 1 ISPs often manufacture their own computer hardware components too. Some examples of Tier 1 ISPs include:

AT&T Internet
CenturyLink
LG
Lumen
Samsung
Fios by Verizon
Telcos
Vodafone

Tier 2 ISPs

Most national and regional internet service providers rank as Tier 2 ISPs. Tier 2 ISPs don’t manufacture their own parts like their Tier 1 counterparts. However, these ISPs still provide high-speed connections. Tier 1 ISPs can turn around and sell their access to Tier 2 providers. The largest difference between Tier 1 and Tier 2 ISPs is that Tier 2 ISPs have to purchase their network access; Tier 2 ISPs are at the mercy of Tier 1 companies, but can still sell their services to users.

Although Tier 1 ISPs can have international reach, Tier 2 ISPs only have local or regional reach. Yet Tier 2 ISPs can “peer” into other Tier 2 networks without charges. Examples of Tier 2 internet service providers include:

Astound Broadband
Comcast Xfinity
Cox
Frontier
Mediacom
Spirit Communications

Tier 3 ISPs

Tier 3 ISPs must travel through Tier 2 and then Tier 1 network service providers in order to give their customers internet access. Tier 3 internet service providers strictly purchase their internet access and do not have “peering” capabilities. These ISPs don’t have a network to call their own and constantly roam to find an accessible network for customers. Often, the network options Tier 3 ISPs provide can become congested, and they may offer only slow connection speeds.

If you don’t change locations often, and need a static internet connection for minimal use, Tier 3 ISPs can prove cost-effective. Tier 3 ISPs can also grow their connections and reach and graduate to Tier 2. Some examples of Tier 3 ISPs include:

Boost Mobile
Cricket
Mint Mobile
Qwest
Virgin Mobile

A computer mouse sits atop a book that sits atop a laptop. The book’s spine reads The Internet is My Religion.

The internet is such a pervasive part of our daily lives now. When you’re choosing an internet service provider, it helps to know exactly what you’re paying for, and understanding the different types of ISPs should allow you to make an informed decision.