[12126] in Commercialization & Privatization of the Internet
Marketplace Analysis
daemon@ATHENA.MIT.EDU (jmaloff@aol.com)
Fri May 6 19:23:37 1994
From: jmaloff@aol.com
To: com-priv@psi.com
Date: Fri, 06 May 94 17:31:34 EDT
Attached is the Executive Summary from my recently complete analysis of the
size and scope of the U.S. Internet access marketplace.
The full report is currently available in paper form, with the electronic
version to be available shortly. The current price is $150.
Many thanks to all of you to helped by contributing your own information. I
look forward to a more comprehensive report in the future on this and other
related topics.
Joel Maloff
(313) 426-1331
The Maloff Company
Joel H. Maloff, Internet Consultant Telephone (313) 426-1331
Internet: jmaloff@aol.com
10371 N. Territorial Rd.
Dexter, MI 48130 U.S.A.
1993-1994 Internet Service Provider Marketplace Analysis
The Maloff Company
Internet Consultants
(313) 426-1331
April, 1994
Copyright (c) The Maloff Company, 1994
Federal copyright law prohibits duplication or reproduction in any form,
including electronic, without the permission of The Maloff Company
1993-1994 Internet Service Provider Marketplace Analysis
Areas of Coverage
Page Number
Executive Summary 3
Size of Market and March, 1994 Market Shares 5
Who Will be in the "Top Ten" in March, 1995? 7
Methodology and Marketplace Assumptions 8
Sizing of the Market (3/94 to 3/95) 11
Significant Trends 12
Potential Pitfalls and Concerns 13
Perceived Opportunities 14
Categories of Internet Access Providers 16
Commercial Access 16
Internet Resellers 16
Research and Education Networks 17
Bulletin Boards 18
Information Providers 19
Service Provider Responses and Information 20 - 44
Executive Summary
The Internet is one of the most talked about industries in the world today.
With the degree of attention that it has been receiving and the number of
providers seeking to offer Internet access services, it became apparent that
there was a need to determine the current size of the Internet access
marketplace, who the key providers are today, who they are likely to be in
one year, and at what rate the industry appears to be expanding.
This study looks at the Internet access marketplace in the United States. It
does not include revenues derived from other sources (i.e., database access,
consulting services, security services, user interface software, routers,
etc.) but rather emphasizes revenues accrued from the sale of access only
(Dial-up to dedicated leased line connections).
As rapidly as the Internet in the U.S. is evolving, this report represents a
snapshot only, and any attempt to quantify such a moving target is bound to
miss some portion. By inviting the known vendors to provide input and using
our knowledge of the marketplace to fill in the gaps, we believe that we have
a good "place to start." Future revisions will attempt to enhance the
comprehensiveness of this study.
This report is organized into the following headings: Size of Market and
March, 1994 Market Shares, Estimated Rate of Growth (3/94 to 3/95), Projected
Market Shares (March 1995), Significant Trends, Potential Pitfalls and
Concerns, Perceived Opportunities, and Categories of Internet Access
Providers, (Commercial Access Providers, Internet Resellers, Research and
Education Networks, Bulletin Boards, and Information Providers).
Major conclusions reached in this report are:
In March, 1993, we estimated the following ranking of Internet access service
providers, with their approximate percentage of the total U.S. IP access
marketplace (estimated total IP services revenue - U.S. = $47.6 million),
based upon revenue. No consideration was given to the source of the IP
connectivity revenue (Federal, commercial, etc.) The intent of this effort
was to understand the size of the marketplace, the size of market share held
by the major providers or groupings, the dollar value of the entire market,
and the rate of expected growth.
ANS 19%
PSI 16%
UUnet/Alternet 7%
Non-Specified Regional Networks 31%
In March, 1994, we now estimate the following changes in market share (with a
total annualized revenue value of $118.8 million):
PSI 13%
UUNet/Alternet 12%
Sprint 12%
IP Resellers 10%
Non-specified Regional Nets 10%
ANS 9%
NETCOM 7%
CERFnet 4%
Colorado Supernet 4%
NEARnet 3%
World 3%
By March, 1995, the Internet access marketplace in the U.S. will have
exceeded $300 million.
Growth rates will average 13% PER MONTH across the board for the next twelve
months, with some providers continuing to grow at as high as 35% per month.
The average annual fee for 56 Kbps leased line connectivity today (not
necessarily including routers, csu/dsu, software, etc, and normally not
including the "local loop" or "tail circuit" required from a local exchange
carrier) in the U.S. is currently $8,591.
The average annual fee today for T-1 leased line connectivity is $20,500.
With growth rates as high as these, there are significant opportunities for
providers to prosper or overextend themselves to the point of no return.
Also, pricing is becoming much more competitive, and will create "barriers to
entry" for organizations considering this business, and stumbling blocks for
the less agile existing competitors. This report illustrates some of the
trends, opportunities, and "potholes" that are strewn across the "Information
Highway" known as Internet access services.
The information in this report is expected to be useful to organizations
interested in learning more about how this industry is growing - from an
end-user perspective to those of potential investors.
We welcome the input of interested parties, especially service providers that
we may have missed. Please send correspondence to jmaloff@aol.com or
joel@maloff.com. Our telephone number is (313) 426-1331.
