The growth in the European Internet access market will be fueled by business-to-business electronic commerce and is expected to reach the $11.8 billion mark by 2001, according to a new study by Forrester Research Inc.
Business access rather than consumer access spending is projected to be the major revenue source by 2001, the study said.
The report predicts that big companies will encourage their business partners to follow them online, thereby accentuating the demand for additional connections and bandwidth.
Specifically, large to medium-sized firms are
forecasted to produce 77% of business access spending in 2001. Although smaller businesses make up over 90% of regional enterprises, Forrester said they will most likely remain with dial-up accounts and not contribute a large portion to overall access growth.
The study claims that the medium-to-large business sector will most
likely be handled by global telcos such as WorldCom and Qwest–those that can offer competitive pricing, services, and the scalability necessary to support business-to-business e-commerce.
In several nations, established Postal Telephone
and Telegraph (PTT) companies will probably leverage their monopolistic infrastructure dominance, according to Forrester, while other regions are expected to allow the bigger global carriers and new entities to offer competitive pricing and service to the business community.
Due to brand recognition, however, the study said that European telephone companies will maintain a firm foothold in the entry-level consumer market. Competition for the PTTs will likely come from those companies that can provide more bandwidth and high-speed connectivity via cable modems and other new technology. Independents will also want a piece of the market as well.
“Today’s Internet access landscape is populated by a limited number of
providers offering undifferentiated products and services,” said Joe Sawyer, analyst in Forrester’s European New Media Strategies service. “As businesses and consumers move onto the Internet in greater
numbers, the online population will fragment into several distinct groups. To succeed, access providers must develop an understanding of these groups and devise clear strategies that meet their particular needs.”
Consumer Internet access spending will move at a much slower pace, climbing to an expected $4.6 billion in 2001, according to the study. Forrester said contributing factors hampering consumer market growth include low PC penetration, high local phone rates, few provider choices, inconsistent network performance, and a dearth of multilingual Web content.
“To reach Europe’s online population, new media companies need to cultivate existing audiences and expand as demand grows,” added Sawyer. “While telco home pages provide fertile ground for online promotions and partnerships, firms should avoid exclusive deals that might prevent distribution via other channels, such as portals. Branded access offers should be reserved for markets where no provider has established clear market share or where on-line adoption is lagging across all groups.”