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Consumer ISPs Giving Way to Business Providers

Although consumer ISPs now generate more revenue than business counterparts, the balance of power will shift by 2000, according to a report by Cahners In-Stat Group.

By 2002, the US business ISP market will be worth more than $63 billion and will be providing higher margins than the cut-throatconsumer segment, according to the Cahners' report "Big Business: Ranking and Profiles of the Top US ISPs serving the Enterprise,1999."

"All of the major business Internet sevice providers areseeing revenue growth of almost 100 percent in 1999," said Kate Von Goeler, industry analyst with Cahners In-Stat. "Although WorldCom/UUnet looks like a speeding train dominating the business Internet service market, the track will become curvy as new service offerings appear."

According to the report, the market is currently dominated by the carriers, emerging technologies and international and small business markets are opening new opportunities for second-tier business ISPs to gain from the almost $51 billion of new revenue that businesses will spend annually on ISP services by 2002.

Other findings of the Cahners report include:
  • Upstart ISPs are not being shut out of the Internet service game. Many are thriving by serving the small and medium enterprises long neglected by the major carriers.
  • The growing importance of value-added services also offers upstart ISPs room to wrest power from the incumbents.
  • Three emerging markets are the current battlegrounds for ISP evolution -- ASPs, SOHO (small office/home office), and SMEs (small and medium size enterprises), and international markets.
  • ISPs who hope to serve the ASP market will (at minimum) need to enhance their data centers and bandwidth capabilities to accomodate real-time applications that will require unprecedented scalability.



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