[London, ENGLAND] 2000 started with great promise
for Internet companies in Europe, but is ending
with uncertainty, despite a surge in Internet usage by
the general public.
The “misses” have included auctioneer QXL.com
which has seen its share price decline by 99 percent.
The “hits” have included AOL, which has accelerated
its European growth by introducing unmetered access
based on a viable business model.
But what have been the most important events and trends
in the European Internet economy over the past twelve
months — and what do they mean for 2001?
At the top of the list has to be the auctions for
third generation UMTS (Universal Mobile Telecommunications
System) licenses which have threatened the telecoms
industry with recession. The governments of the U.K. and
Germany believed themselves to be the biggest winners,
having gained around US $70 billion between them — but in
effect it has been just another “taxation” that will lead
to higher prices for the consumer.
For 2001, the third generation licenses mean a debt
burden without any product — as the first 3G services
are still a year away.
In the meantime, the imagination of the European public
has been caught by Short Messaging Services (SMS),
with mostly young people sending billions of short
text messages to each other’s mobile phones. Thousands
of visitors to U.K. Web site SMSBoy.com have been
sending free messages to mobile phones from the
desktop over the Internet.
“SMS text messaging has become hugely popular with the
15-24 age group, thanks to the pay-as-you-go phone
revolution — people like students, those starting out
in their first jobs and so on,” said Shakil Khan, who
launched SMSBoy.com in November.
At the beginning of 2000 most experts breathed a
collective sigh of relief when the Y2K bug (remember
the Y2K bug?) failed to materialize. The scene was
set for the uninterrupted progress of the Internet
revolution. But investors soon found that piling into
Internet stocks was not a sure way to riches.
High profile sites such as boo.com and clickmango.com
were among the biggest “misses” of the year, but there
were dozens of others. In particular, American dot-coms
began to have second thoughts about expanding into
Europe. Dressmart.com pulled out, while Buy.com also
closed its offices in France and Germany. Eventually,
even The Street terminated TheStreet.co.uk, consigning it
to Dotcom Graveyard in a cost-cutting exercise aimed
at protecting its core U.S. business.
The demise of some dot-coms, however, did not signal
the end of Internet growth in Europe. On the contrary,
it was the initial success of the dot-coms that prompted
“bricks and mortar” companies to hit back and become
“clicks and mortar” companies with a presence on the Net.
That very presence has helped to drive the weaker dot-coms
into oblivion.
In 2001, Europe will have a new top level domain, .eu
(“dot eu”) which governments hope will pose a serious
challenge to the worldwide dominance of the .com
enterprises. Britain and Denmark will enjoy .eu status,
despite not using the euro currency.
Broadband access is likely to be another “hit,” despite
the 2000 failure of United Pan-Europe Communications (UPC) and
Excite@Home to conclude a deal that would have created
the largest broadband enterprise outside North America.
In the U.K., BT’s gradual and reluctant unbundling of
the local loop will eventually lead to widespread broadband
access over telephone wires. For content providers it is
this uncertain evolution of the medium itself which poses
the biggest problems, perhaps leading to more dot-com
collapses even as the number of Internet users continues
to rise.
When the shakeout is over, the Internet in Europe will
be leaner and fitter — and better able to cope with
the brave new world of 2001.
