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New services raise Internet stakes
SAN FRANCISCO - Industry executives predict more casualties among the USA's 4,500
Internet providers as a growing number offer Web users a new wave of services, such as
voice mail and video conferencing.
This week, Sun Microsystems and Lucent Technologies announced a system that lets users
get both their voice mail and e-mail from one inbox on the Web or an ordinary phone.
Similar systems are coming from two other partnerships, Netscape-Amteva Technology
and Software.com-Mediagate.
Technology like "unified messaging" and Internet phone calling might be the boost
struggling companies need to raise prices from $20-$25 a month for unlimited Internet use,
says International Data Corp. analyst Paris Burstyn.
Small, local Internet service providers (ISPs) and large national ones are in the best
position to survive, says Susan Almeida, president of The Almeida Group, a consulting
firm in Hingham, Mass.
The smallest ISPs can make money by offering Web site design. Plus they have lower
costs and less-demanding customers. The biggest, like America Online or AT&T, have
size and financial muscle.
But many midsize companies - those with revenue less than $100 million or fewer than
250,000 customers - lack the capital to keep pace.
Research firm The Gartner Group estimates the number of Internet providers will drop to
about 500 by 2002.
In fact, the shakeout is under way: RCN, Verio and SBC are becoming national players by
acquiring smaller companies such as Erol's in the mid-Atlantic, Hiway in Florida and
PacBell Internet in California.
Newcomers, such as Level 3 and Big Planet, also have an edge because they don't have
old technology to upgrade. They can start out offering advanced features.
Earthlink Network, the No. 6 Internet service, according to Jupiter Communications, has
upgraded its computer system twice in nine months to keep ahead of technology. "Most
ISPs can't do that," says Vice President Kirsten Kappos.
Sun CEO Scott McNealy sees ISP consolidation as an important step toward making the
Internet accessible from anywhere, much like cable TV.
"We don't need 7,000 service providers, just as we don't need 7,000 electric utilities,"
says McNealy, who says soon a wide range of appliances and consumer devices will be
connected via the same network.
By Doug Levy, USA TODAY |
