How Does an ISP Work? [Explained in Simple Terms]


An Internet Service Provider (ISP) provides you with internet for all your home networking devices using various connectivity mediums like Dial-Up, Broadband, Coax cables or Fiber optic connections. ISPs ensure that users get access to the internet, route the internet traffic on the server, resolve domain names and manage the networking infrastructure for smooth connectivity. 

Apart from providing internet, they also offer services like web hosting, online storage, and email services, along with renting out networking equipment like Modem or routers.

But how does an ISP work? Let’s understand this process in simple terms:

How Does an ISP Work?

ISPs work through a network of operators to provide internet access to all users. The network consists of three types of ISPs from Tier 1 to Tier 2 & 3. Tier 1 has primary access to the internet, which is then provided to Tier 2 and Tier 3 service providers.

They directly offer internet services to users by assigning external IP addresses for each device registered for their services. A person who wants to become an ISP can choose whether they want to resell the ISP services as a Tier 2 or 3 ISP or want to start building an entire network as Tier 1 ISP.

These external IP addresses are the unique public (and routable) addresses for each device the router uses to connect with the internet and distribute it to other networking devices such as mobile phones, TV, PC, etc. These addresses are provided by Internet Assigned Numbers Authority (IANA) to all ISPs.

All the connected devices use this same public IP address assigned by the ISP. But at the same time, each device has its private address (an Internal IP address) to access the internet from the router. This internal IP address lets the router distinguish between various connected devices. 

Through this external IP address, ISP address, process and deliver every online request of a registered device by establishing a connection between a website and a network. As they provide a path for users’ internet traffic, they also track and monitor users’ online activities for security purposes. However, those who don’t want their ISPs to track their activities can use a Virtual Private Network (VPN) for secure browsing.

You can use the ISP Finder tool to find details and the name of your ISP through this external IP address. The tool will fetch all the connection details like Who your ISP is, region, country, etc., using your IP address.

In General, ISPs act as data warehouses to rent out their services to thousands of large website operators and individuals, like:

Data Center

Data Centers are large (several sq. feet) and secured AC facilities where ISP keeps thousands of computers. These computers are the advanced version of desktops with no mouse, display or keyboard. They are used to store, process and manage the extensive networking data of an enterprise in a secure manner. A technical staff manages these computers through a shared network. An ISP takes care of the installation and maintenance of each of these computers.

Network Connections

The ISPs have access to the top-tie high-speed internet lines (also called backbone connections) to ensure fast and reliable internet connectivity. These network connection lines are thousands of times faster than a normal internet connection used in a home/office. Top Tier ISPs have access to several such high-speed lines as a backup, so if one breaks or damages, they can rely on others.

Server Software

Along with data centers and network connections, ISPs also offer Email and Web server software for website operators. Primarily, there are two types of web servers provided by ISPs, i.e. Linux Web servers and Microsoft Windows, for different technical and website requirements. They also provide a MySQL server and database to streamline sales and inventory channels for eCommerce stores and record information for forums, news sites, etc.

Web Hosting: Dedicated & Shared

Hosting is a server space ISP provides to website operators on which they run their websites. Now this space can be shared or dedicated. In shared hosting, several websites operate on the same server, each consuming some of its bandwidth and thus cheaper yet slower than dedicated web hosting (which only runs a single website on a server).

Marketing & Designing Services

To help emerging brands grow, large ISP also provides marketing and graphics designing services in their packages to their enterprise customers. It is useful and time-saving for those who don’t know much about marketing funnels, channels and designing tools.

Types of ISPs

To better understand the working of ISPs, it is crucial to understand their hierarchy and tier system. As mentioned above, ISPs belong to three Tiers, i.e.

  • Tier 1: The top-tier or primary Internet service providers get access to the internet through peering agreements. It is an official agreement between a network for free-of-cost internet access and exchange. They generally own their region’s networking infrastructure and manufacturing hardware components. Together, they connect the internet worldwide, and some classic examples are British Telecom, Verizon, Vodafone, At&T, CenturyLink, etc.
  • Tier 2: Regional or intermediary ISPs buy internet connections from Tier-1 internet service providers to sell to Tier-3 ISPs or directly to home or business users. While they have a comparatively smaller reach than the Tier-1 ISPs, they can offer competitive rates and services. Some of the largest Tier-2 ISPs include AT&T, Time Warner, and Cox.
  • Tier 3: They are the smallest ISP that has to go through Tier 1 and Tier 2 providers to access the internet and sell it to end users. They don’t have any peering agreements and networks of their own. That is why network congestion is a common issue with such providers. They are suitable for those who need low bandwidth plans at cheap rates. Some examples are Virgin Mobile, Qwest, Cricket, Mint Mobile, etc.

Types of Internet Provided by ISP

The ISPs provide smooth internet connection through various connectivity mediums, depending upon the bandwidth and data transfer speed you require and for how many devices. Some of the common connectivity mediums are:

  • DSL Internet
  • Fiber-Optic Internet
  • Cable Internet
  • Wireless Broadband
  • Mobile Broadband


What is the full form of ISP?

ISP stands for Internet Service Providers, who make the internet accessible for large entities and individuals through peering agreements. Along with internet connections, they also provide networking equipment, server, hosting and domain services.

Who was the first ISP?

The World was the first commercial Internet Service Provider located in Brooklyn, Massachusetts. In November 1989, he offered a direct internet connection to his first customer. In just two years, he garnered a huge customer base, letting NSF remove the ban from commercial ISPs.

How does an ISP connect to the internet?

An ISP accesses the internet through various connectivity mediums like Dial-up connection, coaxial cable, fiber cable, or DSL. Through them, the request is passed from a connected device to the ISP web server, and they process it so the user can browse, download and stream the data.

Is ISP wired or wireless?

ISP usually offers wired connections. For wireless connections, there are WiFi providers. The wireless service providers let users connect to the server at designated wireless access points like WiFi. Compared to wireless networks, wired connections offer better signals.


Internet service providers (ISPs) are the backbone of the internet. They provide the essential infrastructure and trouble-free internet to individuals and businesses. You can choose the reliable ISP for your internet needs depending on its Fair Usage policy, availability, price plans, customer service and support.

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