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To: Falcon who wrote (36560)	2/26/1998 9:57:00 PM
From: Marcel	Respond to of 61433

Smaller ISPs Face Mixed Future In Deregulated Europe (02/26/98; 10:34 a.m. EST) By Andrew Craig, TechWeb AMSTERDAM -- Deregulation of the European telecommunications market will lead to an explosion of Internet use in Europe, but smaller ISPs will have to specialize to survive, Internet market watchers said Thursday. The increasingly competitive market in Europe will increase competition and drive down prices for Internet services -- but this is more likely to suit the large players such as telecom carriers and global ISPs, according to one telecom analyst speaking on the second day of the Internet Service Provision '98 conference here in Amsterdam Wednesday. Internet growth correlates directly with the regulatory environment, said Sarah Skinner, an analyst at Gartner Group, a researcher based in Stamford, Conn. "This means lower access costs in deregulated countries," she said at the conference. For the European ISP market, this will lead to consolidation, with big players getting bigger and smaller players getting a niche or getting out, according to Skinner. "The ISP market in Europe will consolidate as it grows. Smaller ISPs will develop niche businesses or align with the dominant players in the market," she said. Telecom markets in most European countries were opened up to competing telecom providers on Jan. 1, 1998. the number of Internet users in Europe will double from approximately 15 million users in 1997 to about 30 million users by 2000, according to estimates by Gartner Group. Worldwide, the total number of Internet users is expected to exceed 140 million by 2000. However, the result of this increased competition for some smaller ISPs in Europe will be failure, said Edward Forwood, director of technology at London-based research company Durlacher. But offering niche services such as Web hosting, e-commerce facilities, and providing video and audio services could help smaller ISPs stay in business, he said. The other main option for smaller ISPs is to sell or merge their companies, Forward said. "There are hundreds of these transactions occurring already, but many of them are small deals that don't make the headlines," he said. "There are not many companies picking off local ISPs in any big way yet." The greatest asset most smaller ISPs control is the number of subscribers they have, said Forwood, who added that it was not necessarily the operating profits of smaller service providers that make them attractive acquisition targets. A small provider can be sold for between 70 pounds ($115) and 100 pounds ($165) per subscriber, while a medium-sized provider can command a price equivalent to between 220 pounds ($362) to 270 pounds ($445) per subscriber, according to Forwood.