Report: Australian ISPs Must Focus on Service to Survive

Internet service providers (ISPs) in Australia will need to supply more value-added services to survive, according to a new report from International Data Corporation (IDC).

IDC’s report on the Australian ISP industry found that in order to
flourish, many providers will need to go outside the realm of providing
Internet access, Web hosting and content design.

Tim Sheedy, market analyst
for the Internet and intranets at IDC, said that ISPs may need to broaden
their range of services to maintain revenue in an increasingly competitive

“As Internet access becomes a commodity item, reducing ISP opportunities
for profit, ISPs are looking for new sources of revenue, and those new
entrants into the market generally have some core business beyond simple
Internet access,” said Mr Sheedy.

These value-added services include providing intranet consulting and
e-commerce integration services. Mr Sheedy observed that such innovations
are coming particularly from businesses that have moved from related
industries directly into the Internet space. Consequently, he said, ISPs
need to recover ground in value-added services to maintain their own
revenue levels.

IDC surveyed 120 ISPs across Australia for its report, “The Australian
Internet Service Provider Market, Review and Forecast, 1997-2002.” This
represented a response rate of 24 percent of the country’s 600 ISPs. IDC
observed a 20 percent rise in the number of ISPs over the past year, and
forecast the industry to generate over AUS$900 million in 2002 over its
estimated AUS$252 million revenue in 1997.

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