Internet Service Providers believe most of their projected revenue growth
will come from business customers, according to the results of a recent
survey.
Conducted by KPMG and Planet Direct, a localized content
provider for ISPs, the survey polled close to 250 ISPs throughout the month
of February, with a 15% response rate.
The results show that ISPs expect an 86% growth rate from 1997 to 1998.
Close to 128% of this growth rate is projected to come from the business
sector and 66% from residential consumers, even though currently most of
their existing customer base is residential. ISPs earn $33.95 per business
subscriber versus $13.50 per residential consumer.
In addition, ISPs responding to the survey reported that business customers
are less likely to cancel their subscription–with a 1.6% cancellation
rate–as opposed to a 3% drop-out rate for residential subscribers.
The survey also found that smaller ISPs, with 10,000 customers or less, are
reporting greater profitability than larger scale ones, and that the costs
for customer support are not rising as more subscribers are added to their
client base.
Furthermore, ISPs reported an increase in marketing efforts, with 66%
focusing their campaigns in the educational sector, 34% the government, and
31% other groups.
