Market Share Wanes for Top US ISPs

Internet-access heavyweights are watching their subscriber market share recede as new business models pour into the Web, finds Cahners In-Stat Group.

The Massachusetts-based market-research firm says that America Online's subscriber base dropped from 24.3 percent at the end of 1997 to 21.5 percent at the end of March 1999. And Microsoft Network lost more than 50 percent of its Net-access market share in the same period, plummeting from 3.6 percent in 1997 to only 1.5 percent at the end of this past March.

Rick Miller, senior analyst with Cahners, says that, since service quality for ISPs (Internet service providers) is about the same, companies must develop new strategies to stay competitive. Telecom and cable providers are among those muscling into the access market and walking away with subscribers.

During 1998, the combined subscriber base of telco-owned ISPs in the United States grew 137 percent, compared to only 37-percent growth among traditional ISPs, says Cahners. Telcos now capture 6.5 percent of U.S. ISP customers, up from 3.9 percent in 1998. Cable-access providers like Roadrunner and AtHome, while representing only one percent of the subscriber market in 1998, have grown their customer base almost tenfold.

More people are turning to telcos for Net access in part because of the companies' ability to extend packaged services. Customers like having multiple services bundled in one easy-to-read bill, says Cahners. "Telecommunications carriers can offer consumers telephone access, long-distance access and Internet access in one package, and at a discount," says Miller.

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