The current series of mergers between high-speed
Internet service providers and technology partners, such as @Home and
Excite, will leave ISPs scrambling to
come out on top of the high speed heap.
The Strategis Group Inc.
study, “High-Speed Internet: Demand,
Technology, and Strategy,” finds that companies are moving towards
consolidating in providing home and business high-speed Internet connections.
The report predicts that by the end of this year there will be more than 1
million cable modem users and nearly 70,000 residential DSL subscribers.
“While high-speed Internet access is seen today as an enhanced service, in
the future it will become de rigeur,” said Elliott Hamilton, director of
US telecom consulting at The Strategis Group. “Players without a high-speed
strategy will be left behind.”
The report also says ISPs will have to offer their customers more before
they will be able to increase prices for the new services.
“Since they will be paying more for faster access, subscribers will demand a
greater return on their investment,” said Matt Page, director of Internet
consumer research at The Strategis Group. “This return will come in the
form of enhanced content and greater, more secure commerce opportunities.”
The report cites examples in the consolidation trend among ISPs, telcos,
cable providers and Internet content providers: in addition to
@Home/Excite, there is also recent deals such as AOL/Bell Atlantic,
@Home/RealNetworks and AOL/Netscape. CNET portal Snap! has also partnered
with several ISPs.
“It is
becoming increasingly difficult to separate telephone companies, cable TV
providers, ISPs, and Internet
content providers into distinct Internet business plans,” said David
Eiswert, director of high-speed Internet
research at The Strategis Group.