More ISPs for Western Europe

The number of ISPs in the 16 major markets of Western Europe grew by 33 percent to around 3,000 in 1999, according to research done by Analysys.

According to Analysys’ “ISP Markets: Western Europe,” this continued rapid growth was fuelled by the substantial increase in the number of both Internet subscribers, which rose 75 percent to 34.5 million, and users, which grew 69 percent to 64.3 million during the year.

“The Western European Internet market still shows significant potential for growth since its continues to lag behind the 45 percent penetration rates in the USA,” said Dr. Philip Lakelin of Analysys. The report also found that Internet use in Western Europe varies widely from country to country. While 42 percent of Swedes, and 39 percent of Norwegians are online, only 9 percent of Italians, and 3 percent of Greeks subscribe to the Internet. In the UK, the Internet penetration rate was 25 percent at the end of 1999.

Analysys expects Internet use to continue to decrease dramatically in the next few years, driven by the falling price of telecoms services and personal computers. The introduction of subscription-free services has prompted a large growth in Internet subscribers. According to Analysys, the launch of unmetered Internet access services will, by removing one of the biggest economic barriers to growth, further stimulate Internet use.

While the overall number of ISPs grew substantially in 1999, Analysys expects life to become increasingly difficult for them in the near future.

“The economics of the Internet industry have changed dramatically,” said Lakelin. “Within the dial-up market, revenue from Internet access is starting to disappear. Companies are being forced to absorb the cost of free-access provision and regard it as a marketing cost for other revenue-earning services, such as advertising and commerce.”

Within the business market, margins for basic access are rapidly declining and ISPs are having to work hard to open up new service sectors, such as applications hosting and content management, the report found. The introduction of new technologies, such as xDSL and mobile Internet access, together with the liberalization of Europe’s telecoms networks, are also acting as further powerful catalysts to market evolution.

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