Emerging countries recorded strong growth as demand for relatively new services remained strong
Los Angeles, CA (PRWEB) January 11, 2013
The Global Internet Service Providers industry is one of the fastest growing industries in the global economy. “Explosive growth is being propelled by rapid advancements in internet-related infrastructure and services,” says IBISWorld industry analyst Kevin Boyland. The emergence of a plethora of powerful personal and business internet applications has transformed how businesses and consumers operate. Both markets are benefiting from the internet's increasing ability to cut time and shrink distance. For businesses, this has delivered productivity improvements and enabled greater connectivity. For consumers it has revolutionized communication, information access and entertainment.
Economic instability as a result of the global recession negatively affected part of the developed world. However, according to Boyland, “The developing world recorded strong growth as demand for relatively new services remained strong.” Over the five years to 2012, industry revenue is expected to grow 10.1% per year on average. In 2012, the industry is expected to grow 9.6% to $330.6 billion. The developed markets of Europe, North America and North Asia still dominate the global industry, accounting for an estimated 82.5% of revenue and, due to the rapid growth of Chinese broadband subscribers, over 80% of global connections. Nevertheless, the emerging markets of South America, Southeast Asia, India and Central Asia have been making some inroads. Broadband penetration in these regions has increased considerably from very low levels over the past five years. However, the wired ISP market in many countries in these regions is much less competitive than corresponding services offered by wireless providers.
The Global Internet Service Providers industry exhibits a low level of concentration, with the top four ISPs accounting for less than one-fifth of industry revenue. No participant dominates more than one geographic region, indicating that industry globalization is low. Notably, the majority of domestic markets are highly concentrated, but this does not translate to the global industry. Players are not expected to ever gain a substantial share of the global internet market given the massive amount of capital that is required to build, maintain and upgrade a network. Ultimately, very few industry participants have the capital strength to successfully compete and dominate in more than one region without undertaking a joint venture. However, the propensity for major merger activity will increase as scale of operations increases in importance. Major ISPs operate in the developed regions of North America and North Asia; over the past five years, these developed markets have approached maturity as the fixed internet market has become saturated. In stark contrast, the developing world has experienced rapid broadband subscriber growth. In the developing world, broadband access prices have fallen to a more palatable level, which has fostered mass adoption. With penetration still much lower than in the developed world, it will be the developing regions of India, Central Asia, and South America that will fuel industry growth over the next five years.
Over the next five years, the internet will become an even greater part of the daily lives of businesses and consumers. Subscriber growth will continue to be strong, driving industry growth. Revenue is forecast to increase in the five years to 2017. However, competition will increase, putting pressure on prices and profitability and spurring greater merger and acquisition activity as firms look to expand economies of scale. Capital investment in the industry is expected to increase as ISPs upgrade and expand their networks.
For more information, visit IBISWorld’s Global Internet Service Providers industry report page.
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IBISWorld industry Report Key Topics
Industry operators provide internet access via wired networks. Some internet service providers (ISPs) offer extra services such as web hosting, web page designing and connectivity consulting. ISPs may provide local or national coverage to retail clients or deliver backbone services, except telecommunications carriers, to other ISPs. This industry excludes wireless internet services provided by wireless carriers, which is covered in I5111-GL Global Wireless Telecommunications Carriers.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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