INTERNET SERVICE PROVIDERS FACE BOTH THREATS AND OPPORTUNITIES: "Free- To-User" Mentality Is Changing Consumer Expectations.Internet service provider Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. (ISP (1) See in-system programmable. (2) (Internet Service Provider) An organization that provides access to the Internet. Connection to the user is provided via dial-up, ISDN, cable, DSL and T1/T3 lines. ) subscription fees from US households are currently running at the rate of $7 billion per year, but as the Internet continues to evolve, ISPs must examine other revenue- generating opportunities to remain competitive, advise Dataquest Inc. analysts, who point to two emerging trends that threaten ISP income streams. "A serious issue for ISPs to consider is the rapid decline in the growth rate at which new households will become subscribers," says Harry Hoyle, vice president for Dataquest's e-Home: Telecom and Online Services US program. "This alone will result in the lower growth rate of consumer expenditure on home PC-based Internet access See how to access the Internet. from 39 percent annually from 1996 to the middle of 1999, to a projected eight percent annual growth through 2001." The second issue for ISPs to address is the expanding "free-to-user" mentality. Dataquest analysts say more US consumers will expect free Internet access in the future. "Free Internet access at conventional speeds is already offered by e- mail-only services, as well as some smaller ISPs," says Hoyle. "While it's unlikely that US households will migrate en masse en masse adv. In one group or body; all together: The protesters marched en masse to the capitol. [French : en, in + masse, mass. to free access providers, the growth in households with free Internet access will accelerate due to the intense competition for the remaining new subscribers and the need to retain existing subscribers." Dataquest analysts suggest US companies examine how European ISPs are handling the free-access issue in the region. The key ingredient for companies in the region has been to find ways to drastically reduce the cost of customer acquisition. This is being accomplished through ISP relationships with major bricks-and mortar brands such as banks and retailers. In some instances, it is simply a case of merchants outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. to their ISPs, but others are co-branded ventures, such as Woolworths (Kingfisher kingfisher, common name for members of the family Alcedinidae, essentially tropical and subtropical land birds, with affinities to trogons and swifts and related to the hornbill. ) with AOL's new Netscape Online service in the United Kingdom. "These new relationships offer established bricks-and-mortar retailers an opportunity to quickly launch a presence on the Internet," says Hoyle. "Conversely con·verse 1 intr.v. con·versed, con·vers·ing, con·vers·es 1. To engage in a spoken exchange of thoughts, ideas, or feelings; talk. See Synonyms at speak. 2. , it offers ISPs a way of enriching their sites to attract more transaction income that will replace the revenue lost from Internet access subscriptions." |
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