Small European Internet service providers will find it increasingly difficult to survive as large players buy up bigger shares of the $10 billion market, new research has found.
The number of ISPs in Europe is continuing to grow, and has already topped 3000, but many of these operators will disappear in the long term, according to the study, conducted by telecommunications consultancy Analysys.
The consumer ISP market will be dominated by big brand players, such as AOL and Freeserve, which will grow their customer bases by gobbling up smaller competitors, report author Philip Lakelin has predicted.
Charges for dialup services will become increasingly rare, as more ISPs turn to ecommerce and advertising for revenue or, in the case of retail brand ISPs, use their services as loss leaders to push other products.
"There will be no more monthly fees unless AOL can work very hard to justify its content," Lakelin said.
He added that the UK's free access model was likely to be replicated across mainland Europe, where a growing band of operators were already beginning to adopt the model of sharing dialup revenue with telcos.
Lakelin was unable to speculate on likely charging models in the longer term, as it said cable was likely to replace dialup as the primary Internet access model within five years.
Business and consumer oriented ISPs will continue to polarise, with the former placing increasing emphasis on offering stable robust networks and service level guarantees.
"In early days, ISPs just came in and didn't segment," said Lakelin. "Now, there's a distinct polarisation."
The report estimated the value of the European ISP market at $10 billion for 1998. The UK had around three million subscribers and 300 ISPs; both figures which are likely to have swelled considerably as a result of this year's free access trend.
Germany recorded the greatest number of both subscribers and ISPs last year: 6.5 million and 600 respectively.
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