US business Internet access generated $12 bln in 2003

Internet access services for businesses remains one of the brighter service areas in the US telecommunications industry, according to In-Stat/MDR. The research firm estimates the market generated just over $12 bln in 2003 and forecasts that service revenues will have low single digit growth through 2008. In-Stat/MDR forecasts that broadband access services will drive much of this growth.

In-Stat/MDR surveyed 560 US firms with Internet access, and asked them what three factors they considered the most important in selecting an Internet service provider. 73% of respondents said service quality/reliability was the most important criteria in selecting an Internet service provider. 69% selected price. 21% of respondents selected company reputation, knowledgeable customer service staff, and availability at multiple locations/national footprint. Nearly 15% of respondents cited having customer service based in the US, versus being outsourced overseas, as one of their three most critical selection criteria.

The average, annual per-firm expenditure on business Internet access will grow by $122 between 2003 and 2008. Dedicated Internet access services will continue to grow in terms of connections and bandwidth, but overall revenues will decline due to continued price pressures. Overall, there is roughly one connection per Internet connected firm. The Middle market (100 to 249 employees) accounted for less than 1% of all online US firms at the end of 2003, but generated 20% of total access service revenues. This makes this market very attractive to Internet service providers in terms of revenue per firm.