SINGAPORE (03/09/2000) - It has now become a norm for telecommunication service providers to merge with Internet service providers (ISPs) in a bid to steal a ride on the Internet wave. But where does this leave pure ISPs who have neither the financial backing, nor the communication infrastructure of a telco carrier?
The ability to provide services via various forms of communication access presents an attractive option for enterprises, said Tan Tong Hai, general manager, StarHub Internet.
"Together, I can partner content providers, offering and handling all different access sources for the customers, be it mobile, phone, or Internet," Tan explained. "You don't have to worry about infrastructure because we'll be able to offer a total solution from the access aspect."
"And because we're at the heart of the Internet, customers need no longer fear about bandwidth problems," he said. "So having telco support has its advantages."
But there is no disadvantage for pure ISPs, said Nicholas Lee, chief executive officer (CEO), Pacific Internet (PI), who noted that the ISP did well in competitive markets such as Hong Kong, registering significant growth rates in revenue and subscriber base.
PI's differentiator is in its quality of services and product offerings, Lee said, and the market will be able to discern better quality services from inferior ones.
"In every technology evolution, the content part will become king somewhere along the road," said Larry Ang, president, Pacfusion.com, wholly-owned subsidiary of PI, which he said was set up for that very purpose, to "fuse Internet with content and services".
"At the end of the day, you can have huge pipes and infrastructure, but you still need good content and services to attract the users," Ang said.
Sandra Ng, director for communications research, International Data Corp. (IDC) Asia-Pacific echoed his view, and noted that PI is playing in a different ball game from telcos.
"Now that the government has opened the market to have service-based competition, StarHub and SingTel will act as wholesalers for service providers," Ng explained. "So service-base competitors would have to buy their access from SingTel and StarHub, and having an Internet arm definitely will help from a telco's point of view."
"But PI is not a telco, it's a service provider, and it's definitely playing in a different league," she noted. "While the trend now is for an ISP to move in with a telco, big ISPs can survive and do well because they are in a hot area."
The key thing is not to depend on access and to focus on what drives revenues, she stressed. "It's not just about access. You've got to move away from that, and provide value-add such as content provision and Web hosting services."
There are not many organizations who only look at obtaining all access in one bundle, Ng noted. "At the end of the day, businesses look at the type of services you can provide, and how your service package can meet their requirements," she said. "I haven't heard of organizations that look purely at a provider offering all communication access. I don't think this is a major concern."
StarHub Internet has also caught on the content game, and is focused strongly on "the information aspect", Tan said. "We believe it's not just about tying up infrastructure to services, it should move out to include content and information services."
And PI also seems set on ramping up its communication access provision, and has applied for a series of telco-related licenses including callback, third-generation, and international direct distance.