Prices for internet services have increased due to growth in demand resulting from the increasing number of businesses and higher investment in technological infrastructure
Los Angeles, CA (PRWEB) February 21, 2015
Internet services have a buyer power score of 3.7 out of 5, which is representative of moderate buyer power. According to IBISWorld analyst Keiko Cadby, high market share concentration, the lack of substitutes, and high switching costs hurt buyer power. Buyer power is improved by the substantial competition within the market.
Market share concentration is high in the internet service market. Although many businesses in business parks and urban areas have an adequate supply of ISPs, a lack of competition for internet providers limits buyer power in some locations, continues Cadby. Low numbers of suppliers typically lead to local monopolies, which significantly strip buyers of negotiating ability. Buyer negotiation power increases accordingly with the number of ISPs competing for business in their area. Major suppliers include AT&T Corp., Verizon Communications Inc. and Comcast.
The lack of substitute services cuts into buyer power. As such, buyers are limited to qualified market suppliers. Fortunately, high 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.
Due to high switching costs, buyers can then use the length of the contract to negotiate better deals. ISPs prefer retaining clients long term, rather than losing clients easily by 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, so buyers that bundle related products and services may find suppliers to be more lenient on price.
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. To gain leverage, buyers should have their internet specifications and customer service expectations written in a contract in case of issues with the ISP. 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 se
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
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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.