WATPA: FW: Report Shows Internet Approaching Oligopoly

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From: Norman J. Jacknis (norm@jacknis.com)
Date: Mon Jun 05 2000 - 22:21:53 EDT

The following might be of interest as we watch the development of Internet services.


Report Shows Internet Approaching Oligopoly

The big six providers account for over 73% of the market, and while dialup remains the preferred connection method, DSL and Cable are growing fast. The dialup area is marked by ever-greater competition.

According to CyberAtlas, TR's Online Census compiled by Telecommunications Reports International (TRI), analyzed Q1 2000 subscriber data and made several conclusions. Sure, you know the big providers have the most subscribers, and that the market is growing fast, but here are the stats.

According to the report, the six largest ISPs now account for 73 percent of the total online audience. These ISPs are America Online, NetZero, EarthLink, CompuServe, MSN Internet Access, and AT&T WorldNet. Similarly, leading the cable modem market are At Home, followed by Road Runner, which in total accounted for nearly 98 percent of the overall cable modem market.

Microsoft's WebTV is the undisputed leader in the TV Internet market, with more than 98 percent of the subscribers, according to the report

The DSL market saw 183 percent growth in the first quarter of 2000. According to the report, much of this growth is attributable to the aggressive deployment and promotion of DSL by the Bell companies. The top three DSL providers are now SBC, US West, and GTE.

Is the DSL Market Open?
As we reported earlier this year, the USISPA argues that the Bell companies monopolize the DSL access market through loss-leading pricing and illegal obstruction of CLECs and third-party ISPs. The New Networks Institute agrees, and further alleges that states' Public Utility Commissions have absolutely failed to regulate the DSL industry.

Account Growth by Access Technology

Service Accounts Q1 2000 Growth
Dialup 46,695,000 10%
DSL 189,500 183%
Cable Modems 2,277,750 44%
Internet TV 1,115,300 -0.2%
Total 50,277,350 11%

Source: TR's Online Census

Note, however, that as our columnist Pat Fusco explained in her article "Give Peace a Chance," numbers of accounts are not comparable across platforms. A DSL account could be a SOHO business with at least five users and a significant revenue stream, while a dialup account with a free ISP generates no revenue and may not even be active. She also argues that DSL is growing faster than cable because independant ISPs are allowed to supply DSL services (their DSL efforts are hindered, wheras independent ISPs are prevented entirely from providing cable Internet access).

Dialup Competition.

The most popular Internet access method remains dial-up ISP, which now accounts for nearly 47 million customers. The dialup area also has the most competition.

"From rebates to free Internet access, this last quarter was marked by aggressive promotions on the part of ISPs that want to capture greater market share," said Amy Fickling, managing editor for Telecommunications Reports. "The increased availability of high-speed services via cable modem and DSL also has enticed additional consumers to get online."

CompuServe, MSN Internet Access, and Prodigy were among the traditional ISPs offering rebates during the first quarter to attract subscribers. Such rebate offers typically provide PC buyers with a $400 rebate for signing up for three years of online service with an ISP. "As more customers turn to high-speed access, the dial-up ISP market may see significant changes in its demographics and services as premium customers and features move to the high-speed platforms," Fickling said.

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