Prices for internet services are expected to increase at a slower rate as competition among suppliers rises.
Los Angeles, CA (PRWEB) June 06, 2014
Internet service have a buyer power score of 3.7 out of 5, which is representative of moderate to high buyer power. “Buyer power takes into account the negotiation power buyers have with ISPs when setting up in a well-supplied area, as well as the decreased power when faced with a smaller selection of ISPs to choose from,” says IBISWorld business research analyst Pierre Dessertenne.
Many business areas will have an adequate supply of ISPs because business parks and urban areas are of prime value for ISPs. Lack of competition for internet providers limits buyer power in some locations however, leading to local monopolies. Consequently buyer negotiation power increases tremendously in areas where several ISPs are competing for business.
Buyer power is reinforced by increased competition from both new and already established ISPs entering more markets on the national scale. “The rise in competition is expected to slow the recent price rate increase and boost the quality of service, as well as provide buyers with more choices,” says Dessertenne. The entrance of more ISPs is expected to result in aggressive competition in service and price in an effort to lure new customers and retain old ones, a situation that favors buyer power. The increase in competition has made ISPs more willing to negotiate and offer discounts to buyers seeking new internet service, as well as current clients hesitating to renew contracts and considering switching to another ISP.
Buyers can then use the length of the contract to negotiate better deals because ISPs prefer retaining clients on the long term rather than overcharging and under-delivering in the short term, especially due to rising competition. ISPs are also trying to protect their legacy services such as phone and TV.
Buyer power is negatively impacted by the lack of regulation in the industry, which allows ISPs to set their own prices and standards of service. Buyers should therefore have their internet specifications and customer service expectations written in a contract to have leverage in case of issues with the ISP. Major vendors include AT&T Corp, CenturyLink Inc., Charter Communications Inc. and Comcast. For more information, visit IBISWorld’s Internet Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of internet services. Internet service providers (ISPs) offer users access to the internet and relevant services such as domain name registration, hosting, dial-up access, leased line access and collocation. This report focuses on obtaining internet services for business users, and the associated services that a buyer would find useful.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.