Small European ISPs will find it increasingly difficult to survive as large players begin to dominate the industry, which has been valued at $10 billion.
A study conducted by Analysys revealed that although the market was growing rapidly - with more than 3,000 ISPs in Europe - this figure is set to decline. The consumer ISP market will be dominated by big brands such as AOL and Freeserve, which will become increasingly acquisitive and consume smaller competitors.
Philip Lakelin, analyst at Anal-ysys, claimed that charges for dial-up services will become increasingly rare as more ISPs turn to e-commerce and advertising for revenue. However, retail brand ISPs will increasingly 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. The latest company to jump on the bandwagon is Dell, with its pan-European service, DellNet, launched on 8 June.
Business and consumer-oriented ISPs will continue to polarise, with the former placing increasing emphasis on offering stable robust networks and service-level guarantees.
The report estimated the value of the European ISP market to be $10 billion for 1998. The UK has three million subscribers and 300 ISPs. Germany has the greatest number of subscribers and ISPs, with 6.5 million and 600 respectively.
LOOSENING THE CHAINS ON E-COMMERCE
In Parliament last week, Steven Webb, Liberal Democrat MP for Northavon, raised the question of high telephone charges handicapping the growth of the UK's internet industry. He asked the government to encourage internet adoption and accused it of refusing to see the need to intervene to force telecoms to offer unmetered internet calls.
This comes as research from the University of Texas revealed that the value of the internet and e-commerce to the US economy was $301 billion for 1998.
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