Forum Archive Index - August 2000

["David Reid" <aspex@ix.net.nz>]

Will this happen here? OR has it started already?

AMSTERDAM, Aug 2 (Reuters) - Intense competition in broadbrand Internet services will lead to established telecoms carriers crushing independent Internet service providers (ISPs) and cable company ISPs such as Excite Chello, technology research firm Forrester Research said.

"It's the telcos with their ubiquitous networks and enormous resources that will win in the race for broadband. Telcos are better positioned to absorb the huge costs of building out a broadband network," Forrester analyst Lars Godell told Reuters.

Although cable companies are currently leading the race with 360,000 installed households in Europe at the end of 1999, that will quickly be eclipsed by telecom carriers, which will roll out services widely by the end of 2001.

"Cable only reaches 36 percent of European households, while 95 percent of Europeans have a telephone at home," said Godell, who released a report on Wednesday.

He added that DSL (digital subscriber line) services are superior in speed and quality to cable-based Internet.

Forrester forecasts the percentage of Europeans with fast, high capacity broadband Internet access will grow to 18 percent by 2005 from just 0.2 percent in 1999.

Even with this growth prospect, Godell rated the chances of success for independent ISPs such as Rotterdam-based World Online and Britain's Freeserve (LSE: FRE.L - news) as even lower than that of cable ISPs.

"Independent ISPs like World Online have neither the scope or brand or strength to compete...they don't have any chance to survive in the broadband world for long."

Godell's report predicted that 27 million Europeans will use fast Internet by 2005 and that penetration rates in Scandinavia will reach as high as 40 percent. Penetration in the Netherlands will be as high as 28 percent. About 25 percent of Germans will have broadband by 2005.

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David Reid