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Network industries are all facing change. And nowhere is this more the case than in the Internet Service Provider (ISP) industry, where all providers, big and small, are dealing with technological, structural and economic challenges. For this first edition of the The ISP Report™, New Paradigm Resources Group, Inc. (NPRG) draws on its expertise in competitive telecommunications, along with its knowledge of broadband and convergence issues, to address the strategic and operational factors that are forcing ISPs to re-invent themselves.
What does this mean in practical terms? Our experience is showing us that the first step in understanding the changing ISP environment is to look closely at the largest service providers. They control nearly 90% of all subscribers connecting to the Internet in the United States. And they are undergoing significant change in the areas of content, convergence, broadband and pricing. In short, by looking at what these companies are doing and planning to do, smaller ISPs and analysts alike can get a solid overall glimpse of the state of the industry, as well as general trends. Toward that end, this edition profiles the largest ISPs as measured by subscriber numbers.
As a second step, we have found it useful to delve into the operational details that support the decision making behind the broader strategies. Such as what it means to become a competitive local exchange carrier (CLEC), or even a facilities-based CLEC. Or how the new IP-based softswitch technologies affect the voice decision. Even what it really means to become an Application Service Provider (ASP). These are in-depth topics that must be addressed as ISPs move toward an Integrated Communications Provider (ICP) model. Accordingly, several chapters in this report focus deeply on relevant topics.
Two types of reader will find this report useful. One is the industry observer, who will be aided by company profiles, the market sizing and the view of operational issues affecting the industry. Another is the small to mid-size ISP, which will benefit by looking at strategic trends and then begin to delve more deeply into substantive functional details relevant to strategic change.
In the end, all readers will likely see what we think is the most striking aspect of this combination of information: that the road to competitive advantage for ISPs is converging with the road being followed by Competitive Local Exchange Carriers (CLECs). The signs are unmistakably pointing competitive communications companies in the direction of an ICP strategy, one that includes converged voice, data and video. For the time being, NPRG will maintain separate ISP, CLEC, BLEC and ASP reports. How we will wind up categorizing the telecommunications universe even a year from now, however, remains to be seen. The only thing that is certain is that the lines between traditional sectors will continue to blur.
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