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Is the small ISP in danger of becoming extinct?


Currently there are more than 500 ISP's available within the UK, but for how long the smaller ones will remain in contention against those that have dominated the market such as America Online AOL and Freeserve remains to be seen.

The initial attraction was that UK consumers could use ISP's without having to pay their providers. This meant that the ISP could negotiate a deal with their chosen telecomm company to have a share in the revenue that 0845 and 0345 numbers would generate. This is how freeserve came about.

The demise of the small ISP has been highlighted by the recent case of Callnet's collapse who made the move to offer free unmetered access to the internet. This move is responsible for forcing this company into administration. A number of other companies also attempted to offer unmetered internet access via a freephone number starting a bitter price war. Most of these numbers have now been withdrawn owing to the heavy losses that have resulted from such a move.

It has been forecast that the majority of small ISP's are likely to change their current form within the year either by consolidating or disappearing as they have to be in a position where they have something different on offer to help them survive.

It will be interesting to observe how the sale of Callnet will progress, they currently have a subscriber base of 210,000. Apparently a lot of interest has been shown by rival ISP's, telecommunication companies and other internet businesses that are looking at moving into the ISP market.

Even though there is the fear that the ISP market will be dominated by 2 or 3 main providers other small ISP's still feel that they have a vital role to play and they feel that they can survive as they provide a more appropriate level of service for smaller businesses.

Even the larger ISP's are finding the market hard-going and are being forced to take a big financial risk on unmetered access.


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