• Home
  • News
  • Reviews
  • Digital technology
  • Cloud
  • Data analytics
  • Digital leaders
  • IoT
  • Opinion
  • Events
  • Resources
  • Data Strategy Spotlight
  • Newsletters
  • Sign in
  • Events
    • Follow V3 Events

      Sign up to receive email alerts about our events

      Sign up
  • Resources
    • V3resources 120x194
      Network Security Forensics For GDPR Compliance

      An effective network security forensics strategy can assist an organization in providing key compliance-related details as part of any post-incident GDPR investigation.

      Download
      V3resources 120x194
      10 ways to increase productivity with managed Office 365

      For businesses large and small, relying on a cloud-based collaboration and productivity suite such as Microsoft Office 365 is becoming the norm. Enhancing productivity in your organisation is vital to get ahead in 2017 - and using Office 365 can help, if it's used right...

      Download
      Find resources
      Search by title or subject area
      View all resources
  • Data Strategy Spotlight
  • Sign in
  •  
    •  

      You are currently accessing V3 .co.uk via your Enterprise account.

      Personalise your on site experience

      Download and use the apps

      Access your subscription from outside of the office

      Get relevant news and insight straight to your inbox

      • Sign in
     
      • Newsletters
      • Account details
      • Contact support
      • Sign out
     
  • Follow us
    • RSS
    • Twitter
    • Newsletters
    • Facebook
    • YouTube
  • Register
  • News
  • Reviews
  • Digital technology
  • Cloud
  • Data analytics
  • Digital leaders
  • IoT
  • Opinion
 
  •  

    You are currently accessing V3 .co.uk via your Enterprise account.

    Personalise your on site experience

    Download and use the apps

    Access your subscription from outside of the office

    Get relevant news and insight straight to your inbox

    • Sign in
 
    • Newsletters
    • Account details
    • Contact support
    • Sign out
 
V3.co.uk

Telecoms - A wake-up call for the telecoms giants.

ISPs are running the telecoms show, say Peter Williams and Andrew Phillips.

  • Tewksbury
  • 29 October 1999
  • Tweet  
  • Facebook  
  •  
  •  
  • Send to  
0 Comments

From being a staid, traditional, even sleepy industry as little as ten years ago, telecommunications has undergone a revolution and is now one of the most fast moving and volatile sectors in the world. The change has been brought about from the outside, from a world that used only to be inhabited by the computer nerd. There would appear to be little left to do in 'real life' that now can't be done on the Internet. The World Wide Web is no longer the sole preserve of the cyber-junky, mere mortals having long since taken their first tentative steps on the path to harnessing true PC power. It doesn't take an experienced user to be able to use the Internet for banking or purchase anything from the weekly shopping at a virtual Tesco, to a new PC, a holiday or even a new house or flat. With recent evidence showing that the humble television set is losing its appeal for those who prefer a more interactive experience, the Internet has also become a major advertising tool. Internet Service Providers (ISPs) are at the heart of the new technology. Chris Barley, product development manager at ACC Telecom says: 'ISPs connect businesses and consumers to the Internet. They do this by providing a local connection, via the telephone network to their routing equipment, which allows the exchange of information across the Web. 'The Internet is a network of networks and the basic function of an ISP is to provide a gateway to this.' The ISPs can also register domain names for their customers. The average home user will be aware of most of the big ISP names such as Demon, CompuServe and Dixons' baby, the recently floated Freeserve. What is, perhaps, more surprising is the volume and variety of ISPs that are now available to different users. AFC Connect provides Internet access for supporters of Arsenal Football Club, Madasafish promises a speciality in 'youth access', while NHS People is an ISP for health service staff members. It is promoted as 'the first Internet service to put money back into the NHS while giving free access to the Internet'. The role of the ISP has played a large part in revolutionising the way in which the world does business. The overall number of ISPs is on the increase. There were 3,000 at the end of 1998 and the number is still growing. Many new players are keen to cash in on what is still perceived as a very lucrative new market. According to PSINet, one of the leading ISPs, revenues from Internet access are set to total more than $29bn by 2001. The ISP market is in many respects a classic new market, ultra-volatile, fiercely competitive and with low barriers to entry. But, according to Internet Service Providers in Western Europe - a survey written by Dr Philip Lakelin of telecoms consultancy Analysys, the market cannot sustain a high number of suppliers. He says: 'Most of the factors encouraging market growth are short or medium term. In the longer term, and that really means only the next few years, the Internet access market will become considerably streamlined.' The major telecommunications companies would seem ideally placed to exploit these lucrative opportunities. Homan Haghighi of Compass Analysis, the performance improvement consultancy, is also anticipating streamlining within the market. Haghighi says: 'There are few Internet service providers that are being given the chance to grow. They are usually eaten up by one of the big telecoms giants, go bust or are strategically purchased by a vendor.' Telecoms companies have taken to setting up their own ISPs for a number of reasons. Haghighi says: 'Telecoms companies commodity services' profitability is eroding and they need to look for other avenues to make money. The Internet has become much more than a medium for transporting Web pages.' There should be advantages for customers in dealing with telecom-owned ISPs. Telecoms companies should be able to offer a more complete package to customers. Control of costs and flexible communications packages are also a factor. ACC Telecom's Barley says: 'The benefits of telco and ISP markets merging for the consumer, business or residential user, is that one provider will answer all their communications needs. Integrated billing, handled by one supplier, will enable them to control communications costs more effectively. Businesses and residential users won't have the hassle of having to deal with more than one supplier.' That rush for the one-stop shop has seen furious merger and acquisitions activity in this sector worldwide in recent months, and there is no evidence to suggest that this is slowing. A glance at a few recent business headlines gives some clue to the present fragmentation and the rate of consolidation within the global communications industry. Only in the last few weeks MCI in the US won a $115bn bidding battle for Sprint while AT&T announced a joint venture with Dobson Communications to buy American Cellular for $2.3bn. What is happening is that the nature of the industry is changing at a breathtaking rate and everybody is having to run to stand still. Haghighi says: 'Voice over IP (Internet protocol), e-commerce and e-mail are transforming the Internet into the communication media of choice for the 21st century. It is not just businesses that use it, but it is used for leisure and entertainment, shopping, advertising and booking restaurants. It is taking over from the television and the telephone in one go.' The nature of ISPs is itself changing, with Freeserve at the front of the UK revolution. The introduction of free Internet services threatens to redefine the marketplace, at least in the UK. The introduction of these services has meant that service providers will have to look for alternative sources of revenue to fund their packages, rather than just relying on dial-up fees. Only those ISPs that offer real value-added services are likely to survive. But it is within these services that the real cash generating opportunities lie. Many ISPs already offer standards like web design, but where the real potential resides is in the use of the ISP as a 'jumping off point' for a variety of e-commerce offerings. IT and telecommunications companies are only just waking up to the real potential that the new technologies are offering and it is this that is driving the M&A activity. In fact, worldwide merger activity in the first three quarters of 1999 leapt by 16% over the same period last year, to a new high of $2.2 trillion, according to Thomson Financial Securities Data. A good deal of this has been driven by the hi-tech industries. One of the differences this year is the number of European hi-tech and telecommunications companies that are raiding the US. For example, in April GEC paid $4.5bn for Fore Systems, a US group that specialises in Internet switching equipment. Similarly French company Alcatel paid $1.5bn in March for Xylan. There are number of companies trying to plug perceived gaps in their product portfolios that may hinder their growth in the Internet/data networking market. In the US, the belief is that major telecoms players should be able to offer a bundle of the four core services - long-distance, Internet, local and wireless - to truly achieve sustained growth and economies of scale. The traditional often state-owned telecoms companies in Europe would never have been in a position to offer a combination of services in past. The Internet and ISPs offer the telecoms companies tremendous opportunities, but have they also threatened their very existence. In the past, the national companies tended to be powerful and self sufficient, but rather inwardly focused, concentrating mainly on domestic markets. Revenues were protected by closed markets and consequently there were few threats to the status quo. The dawn of the Internet has ushered in a new era of competition leaving technology that was once the mainstay of the telecoms industries looking very old. Significantly it is new data communications companies like Cisco, which built many of the original low-cost networks that run the Internet, which are now leading the way. The key speakers at the recent Telecom 99, the telecommunications exhibition in Geneva, were not from BT, Deutsche Telekom or AT&T. Instead there was Lou Gerstner of IBM, Bill Gates of Microsoft, Scott McNealy of Sun Microsystems, Lew Platt of Hewlett Packard and Larry Ellison of Oracle. The communications revolution has well and truly arrived. For telecoms companies ISP will be one small part of a much wider strategy, not only in exploiting these new opportunities, but also in defending their old turf from the new boys. It seems certain that the enormous power of the Internet is a long way from being truly realised, and that when all the dust finally settles on the intense M&A activity in this sector over recent months, the market will look very different. - Peter Williams is a freelance writer and director of Kato Publishing. Andrew Phillips is a freelance writer.

  • Tweet  
  • Facebook  
  •  
  •  
  • Send to  

V3 Latest

TSMC starts high volume production of 7nm chips
TSMC starts high volume production of 7nm chips

Claims to have "the most competitive logic density" in the industry

  • Components
  • 25 April 2018
Dell unveils Precision 5530 2-in-1 mobile workstation with Radeon Pro WX Vega M GL graphics
Dell unveils Precision 5530 2-in-1 mobile workstation with Radeon Pro WX Vega M GL graphics

Dell's high-end mobile workstations upgraded with Intel Coffee Lake CPUs

  • Hardware
  • 25 April 2018
Europol coordinates close down of 'world's biggest' DDoS-for-hire service
Europol coordinates close down of 'world's biggest' DDoS-for-hire service

Webstresser admins were also arrested in the UK, Croatia, Canada and Serbia

  • Security
  • 25 April 2018
Almost 90 per cent of UK websites suffer from 'serious' security flaws
Almost 90 per cent of UK websites suffer from 'serious' security flaws

Security firm claims that 117,638 sites out of 135,035 analysed contain serious security flaws

  • Security
  • 25 April 2018
Back to Top

Most read

Oracle: Java SE 8 business users must buy a licence from January next year
Oracle: Java SE 8 business users must buy a licence from January next year
MPs demand answers from TSB over online banking 'meltdown' following platform migration
MPs demand answers from TSB over online banking 'meltdown' following platform migration
AI could improve global stability from around 2040, claims US thinktank RAND Corporation
AI could improve global stability from around 2040, claims US thinktank RAND Corporation
How NoSQL database technology and IoT sensors are being put to work saving endangered elephants and tigers
How NoSQL database technology and IoT sensors are being put to work saving endangered elephants and tigers
Apple and Ireland tax appeal to take place in September
Apple and Ireland tax appeal to take place in September
  • Contact
  • Marketing solutions
  • Enterprise IT Events
  • About
  • Terms & conditions
  • Privacy policy
  • RSS
  • Twitter
  • Newsletters
  • Facebook
  • YouTube

© Incisive Business Media (IP) Limited, Published by Incisive Business Media Limited, New London House, 172 Drury Lane, London WC2B 5QR, registered in England and Wales with company registration numbers 09177174 & 09178013

Digital publisher of the year
Digital publisher of the year 2010, 2013, 2016 & 2017