Tough Times for ISPs
ISPs and telecom providers face a rocky road. Consolidation could be in the cards.Times are shaky for ISPs, as many of them--especially those specializing in business access services--face consolidation. A new report from analysts at Cahners In-Stat Group predicts that economic challenges will lead many providers to merge or go out of business altogether. The report, titled "2001 Business ISPs--Service, Size, and Share," found that the top 10 business ISPs generated more than 65 percent of all access revenues in 2000. Thats especially significant because there are over 6,000 business ISPs in the U.S. But the report also predicted that some smaller ISPs and some regional ISPs will survive by specializing in services that get overlooked by larger players. According to recent revenue numbers, the largest business ISP is still WorldCom/UUNet, and the second-biggest is AT&T. Cable & Wireless, PSINet, and Sprint are also big players.
"While new services will continue to emerge and grow, access services will still account for over half of all business-service revenues, followed by Web hosting, non-hosting value added services, and hardware resell/leasing," says Daryl Schoolar, a senior analyst with In-Stat Group. "Access-service revenue dominance will continue because ISPs use this service as a platform upon which to build other services."