October 24, 1997
Survey Finds Declining Use
Of Major Access Providers
By LISA BRANSTEN
THE WALL STREET JOURNAL INTERACTIVE EDITION
A survey released Friday found a dropoff in subscribers at the nation's
top on-line services and major Internet-service providers over the
summer, but analysts said they don't believe the study's results
indicate much of a slowdown in the number of people getting on-line.
Rather, they said, Web users are increasingly turning to smaller
Internet-service providers as they get more comfortable with the on-line
world.
Telecommunications Reports International Inc., whose Interactive
Services Report newsletter publishes quarterly figures about Internet
and on-line services' membership, said its survey of nearly 50 ISPs,
on-line services, and services offering cable-modem access, free e-mail
and on-line games found subscribers fell 617,400, or 3%, to 20.3 million
from June 30 to Sept. 30. It was the first time the number of users has
declined since the index began.
Much of the decline was due to a 23% drop in the number of subscribers
at CompuServe Corp. amid the turbulence surrounding the deal to sell its
consumer business to America Online Inc. and its Internet backbone to
WorldCom Inc.
But the survey's authors and analysts agreed that they didn't see the
decline wholly explained by CompuServe's woes, suggesting that the data
indicate some Web users are moving to smaller Internet-service providers
as they get more experienced.
"I don't think the Internet is going into some sort of a tailspin," said
Catherine Applefeld Olson, senior editor of the Interactive Services
Report. "A lot of subscribers are migrating away from the big services
to the smaller local providers."
Ms. Olson said that many of the regional Bell operating companies logged
"significant upticks" in subscribers for the period, as did other
regional and local services, Microsoft Corp.'s WebTV Networks unit and
several cable-modem services.
The shift to smaller ISPs is also being seen among business users of the
Internet, said Christopher Mines, a senior analyst in telecommunications
strategies at Forrester Research Inc., the Cambridge, Mass.,
market-research firm.
The market for business-ISP services is more than doubling each year, he
said, adding that "it's almost a situation where the suppliers can't
gain market share because they can't grow that fast. So it keeps
creating opportunities for new carriers to come into the marketplace."
Mr. Mines said that at some point he expects to see greater
consolidation among ISPs, but noted that for now, the number of U.S.
ISPs is continuing to rise despite a flurry of mergers and acquisitions
in the sector.
Rebecca Wetzel, director of Internet Consulting at Verona, N.J.-based
TeleChoice Inc., said the numbers did indicate some slowing of growth as
the market becomes more mature.
The market for dial-up customers is continuing to grow, she said, but
"it is not going to grow at the same rate as it had."
Ms. Wetzel added that more experienced Internet users were looking for
alternatives to AOL and CompuServe.
"I believe that dial-up customers like to have a local service
provider," she said. "They like to have somebody nearby into whose
offices they can take their laptop if things just aren't working right.
That type of a relationship with a regional ISP I think is very
appealing to people." |
