RealTime IT News

Study: ISP Competition Intensifies

Competition for online subscribers is heating up. Presently, five hard-hitting ISPs are doing battle to capture the Number Two slot for online subscribers and consumer mind share.

Looking to come in behind market leader America Online are EarthLink, MSN, Juno, Prodigy and NetZero.com, according to a technology research firm.

"There has been a great deal of activity in the Internet service provider space within the last eight to 12 months, both in terms of merger and acquisition activities and the mainstream emergence of the free service model," said Rob Lancaster, an analyst in The Yankee Group's Internet market strategies planning service.

"In addition to the shakeout, we have seen and heard an extraordinary amount of hype and posturing regarding subscriber totals," he added. "This is an indication that many of the smaller and mid-sized ISPs hear giant footsteps and are puffing their feathers in an attempt to ward-off assailants."

The Yankee Group recently completed a study on the state of the ISP market, focusing on marketing strategies regarding subscriber churn, acquisition and retention.

The company additionally studied the current period of consolidation that the service provider arena is experiencing; the access options that are offered to consumers, including free, fee-based and broadband; and the providers serving the growing private label space.

According to the research:

In the fee-based space, there has been little movement in the top five, as dial-up Internet access becomes a commodity and the market for this service begins to plateau. Future movers in this category are most likely to be ISPs that have strong broadband offerings, such as @home, AT&T, Prodigy and AOL-Time Warner (pending the close of the merger).

In the free ISP market, Juno holds the top spot with more than 2.1 million active subscribers. Well-financed newcomers BlueLight and NetZero are not far behind, with FreeInternet.com and Altavista rounding out the top five.

An in-depth analysis will be soon released in a Yankee Group Report on the state of the ISP space.