UK ISPs envisage bleak future

UK ISPs are predicting a bleak future for themselves, with expectations that a third of them will go bankrupt over the next 18 months, while a further 15% are expecting to bought out.

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By  Zoe Moleshead Published  April 11, 2001

UK ISPs are predicting a bleak future for themselves, with expectations that a third of them will go bankrupt over the next 18 months, while a further 15% are expecting to bought out, and one third are unsure as to how they are going to make money. The disillusionment among the ISPs was uncovered in a survey of 45 UK ISPs by messaging consultancy Outrade.com.

"There is mounting gloom in the ISP industry at present. Unfortunately for many of these companies forged in the dot-com boom days, they are now suffering a severe dose of reality," said Keith Bellamy, Outrade.com's UK MD.

Problems likely to be encountered by ISPs include insufficient funds, poor management and the results of offering unmetered access.

The results of the survey were compounded by a survey from Visual Insights, an e-business consultancy that blames ISPs for failing to inspire customer loyalty through extra services.

Other market analysts are also anticipating hard times for ISPs. Fraser Pearce, research director at Forrester Research, said only ISPs that are heavily linked with a telecoms or networks infrastructure business will survive.

"90-95% of virtual ISPs, which don't have the chance to bundle their services in with other telecoms services, will eventually die," Pearce added

Pearce classifies virtual ISPs as ISPs that don't own their telecoms infrastructure, but rent this from others, focusing themselves on providing content. Many of these ISPs were established during the dot-com boom, offering free subscriptions, and looked to make their money by gaining a share of telecoms charges and advertising revenues. But as the dot-com market has begun to bottom out advertising and telecoms revenues have started to disappear, leaving the ISPs struggling for income.

"Only the bigger ISPs and those that are also telcos will last, and we'll see more consolidation," concluded Bellamy.

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