The internet has grown rapidly from a random collection of mainly academic networks and military control and routing protocols into a global, integrated and sophisticated commercial utility. No longer simply an 'Information Superhighway', it has extended to embrace voice telephony, video and mobile communications as part of a converged network. Connection options and services have expanded, with opportunities for internet service providers (ISPs) to add value beyond simply forwarding bit and bytes.
September 2008 QUOCIRCA INSIGHT REPORT Superhighway at the crossroads
Contacts: The evolution of internet service provision Rob Bamforth The internet has grown rapidly from a random collection of mainly academic networks and Quocirca Ltd military control and routing protocols into a global, integrated and sophisticated commercial Tel +44 1962 849746 utility. No longer simply an 'Information Superhighway', it has extended to embrace voice rob.bamforth@quocirca.com telephony, video and mobile communications as part of a converged network. Connection Clive Longbottom options and services have expanded, with opportunities for internet service providers (ISPs) Quocirca Ltd to add value beyond simply forwarding bit and bytes. This report explores the challenges and Tel +44 1189 483360 opportunities these companies face and takes a look at how their industry might evolve. clive.longbottom@quocirca.com The wave of post dotcom providers is starting to break Claire Nicoll The number of UK internet service providers (ISPs) grew from only a couple in 1993 to hundreds ZyXEL as the dotcom boom drove up the appetite for access and the belief that the internet was a one way Tel +44 1344 303044 street to financial success. Times hardened as the dotcom bubble burst, but the increasing cn@zyxel.co.uk availability of broadband and the new opportunities it offered inflated financial interest once again. Now, as economies of scale kick in, the industry is driving down a path of consolidation. Infrastructure needs to be separated from services As in many other utilities, the investment and return models for the base layer of infrastructure and the services delivered over it are quite different. ISPs can offer diverse services for specific customer needs, but ideally underpinned by a universal connection infrastructure run for the benefit of the industry, not as a profit centre. This requires a shift in the current regulatory model, REPORT NOTE: but would offer substantial national benefits and encourage a diversity of service providers. This report has been Bundles should be an opportunity to cross sell, rather than simply lock in written independently by Forcing customers down a route that locks them in to several services (e.g. triple play of voice, Quocirca Ltd to address video and internet) from one provider might undermine loyalty rather than lock it in. A poor certain issues found in experience with one service will taint the view of others and force more churn than anticipated. today?s organisations. Services can still be bundled, but if offered on an incremental basis with a discount for accepting more, will help the consumer feel in control, and could be extended to up sell more options. The report draws on Quocirca?s extensive Control or ownership of core infrastructure remains a significant advantage knowledge of the The number of ISPs has grown rapidly as demand for access soared when dialup turned to technology and business broadband, but control of the final connection, or "last mile?, is still very important. Forced arenas, and provides opening up of this local loop through unbundling in the exchanges by regulation has had some advice on the approach impact, but the industry is still dominated by the whims of the few larger telecommunications that organisations should network infrastructure companies, in particular BT. take to create a more effective and efficient Service providers need to find smarter ways to explain their offerings if they want to upsell environment for future Even the most technically literate customers are confused about issues such as peak and average growth. bandwidth, latency, quality of service measures and usage allowances. Service providers need to sell the benefits in terms that make sense to business and consumers, and align more closely to the During the preparation of applications, content and services accessed rather than simply the attributes of the connection. this report, Quocirca has spoken to a number of New services provide opportunities for differentiation and new revenues suppliers and customers ISPs can offer more than different levels and quality of access, by layering value added services involved in the areas over their infrastructure that consumers and busines... [download for more]
