How do you Set up a I.S.P.

Most ISP's have disk with software available to load which are free from computer magazines or computer stores,you can also use online services from your computer that is located in Accessories->Communications

ISP Software
Modem
Telephone line

You start the internet connection wizard,to setup your ISP,which the software will have easy to follow on screen instructions

Install the modem in your system PCI slot

Insert the phone line into the modem connector designated as Wall
check to make sure that Dial-Up Networking is setup on the computer

Use the Internet Connection wizard from the control panel to select the ISP you will sign up with,you will need a credit card or debit card to activate the service once the software is installed and you are connected
ISP's
MSN
AT&T
AOL
COMPUSERVE
EARTH LINK

I think you mean you wish to start your own isp. Here is a very basic link which answers all of your questions. It can be expensive to get the bandwidth you need.

http://www.ls.net/~tarvid/notes/ispstartup