Looking at the world today, no person can imagine his or her life without some form of internet usage. The Internet has become a part of our daily life. The Internet Provider industry is ruling all the other sectors of business. With today’s booming technology, most businesses have difficulty without the services of the Internet. Earlier day’s access to the Internet was a costlier, therefore confined to only high profile businesses and people of wealth. The average homeowner did not have access. Even today, smart phone usage does not account for the large numbers of families without direct access to the Internet. From 2002, the price of Internet service has reduced to 93%. Due to reductions in price for usage and the ease of use from satellites and fibre optics, Internet now provides easy access to users all the over the world.
The ISP Industry (Internet Service Provider) is providing fast and easy access to Internet and other related services to everyone, including businesses big and small. The various companies in this Industry are providing services through wireless connections. The major U.S. companies are: Verizon, AT&T and Comcast. Japan based are Nippon and Telephone cooperation. Italy provides Telecom Italia and Telefonica from Spain. The demand from consumers and businesses are on the rise daily, and the competition is increasing at a faster rate (David, 2003).
The profitability of the companies in this Industry depend on how it markets its services and efficiency of operations. The big Internet providing companies are enjoying economies of scale and earning profits in marketing and operations, whereas the small Internet companies are successfully operating at underserved regions. The major products offered by these ISP companies are access to the World Wide Web, designing the websites, and providing technical hosting and supports (Erik, 1999). These providers are allowing consumers to get an access to internet via telephone lines, wireless or cable connections.
SWOT ANALYSIS OF INTERNET PROVIDER INDUSTRY
A SWOT analysis helps the companies or industry to analyse and understand where the industry should place itself in the market, how they can improve and how to defeat their competitors. With the SWOT analysis, a business understands its competitor’s position in the market or industry and identifies where the funds and resources of the company should be invested so as to create new products and services for the consumers (Aimee, 2010). Thus before conducting the SWOT analysis, we will divide the ISP’s into four groups: large ISP’s, small ISP’s, Telco and cable companies
In the Internet Provider Industry, the large or big companies have much more experience of the industry in comparison to small ISP’s. Consumers who are aware of these larger branded names will subscribe to such known companies. Large ISPs have the ability of innovation; they can afford taking risks. Their huge infrastructure is based on laid fibre optics, thus providing Internet at lower rates and they also own some parts of networks which increase their strength in the market (Rahima, 2013.) Their trained and qualified staff is more experienced and provide high quality work.
The large companies in this industry lack superior customer service. With technology rising faster than consumers are educated, computer education and training is on the rise as well. This need for customer service, especially in larger rural areas, brings the need for more customer service centers. Such big companies are not able to provide local contents to their customers, especially the small businesses. They might provide national wide data but not the local content. The national wide data might be useful across the board but many customers who lack the intimacy are outraged (Varun, 2011). The ISP’s are facing real problems in rural areas, as they cannot reach them due to connectivity problems. These companies cannot lay their fibre optics in such places because they face problems related to policies and security. Also the government norms and regulation do not support such ISP’s entering these areas. Having poor infrastructures and connectivity problems forces ISP’s to rely on other providers and on their infrastructure.
The Internet Provider Industry offers a plethora of opportunities for companies. For the large ISP’s, building strong relationships with Telco companies will be fruitful. The reason is that the Telco companies want to enter these markets so with the ISP fearing the lost relationship with such Telco companies, they agree to partnerships. The ISP’s and content providers also enter into mergers for which both companies can enter new markets. For example, when Reliance Industries acquired Infotel, which is an Internet Service Provider, the company participated in the bidding process of a 3G spectrum. Through this acquisition strategy, Reliance was able to allocate and grab the huge amount of spectrum through the nation (Varun, 2011).
This acquisition proves that by acquiring small companies, the big ISP’s can increase their values which are far more beyond the price of the company. To such a degree, there are opportunities for big ISP’s to purchase small ISP’s who are ready for purchase. The other opportunities are covering alternative parts of the world and creating centres for Internet facilities, introducing new advanced technologies related to Internet. They’re able to access more customers at lower rates, penetrating into new unserved markets and rural areas. As large companies have the resources and knowledge, they also provide the opportunities for developing new internet technologies. Lastly, they can branch out into other segments of the industry, which will create an invaluable brand name and customer base.
The largest threat to any ISP is the entry of their established competitors Internet service providers such as Telco and cable companies, etc. These competitors have good experience, personnel and resources to buy these ISP’s. In such a competitive environment, the market might squeeze, resulting in only those ISP’s who provide something exceptional to keep them afloat and surviving. Although there has been opportunities for partnership, mergers and acquisitions, there is the risk and threat of losing the established competitive market. Looking at growth of these ISP’s, the market will become saturated (Foley, 2012). The small providers will survive by serving the niche markets and the big providers will continue to survive, as they are the leader- leaving no space for intermediary providers. For a large ISP to remain in market they have to keep innovating with the product and services they offer so they can create barriers for new entrants.
CREATIVE ACTIONS PURSUED BY ISP INDUSTRY
With the increasing usage of Internet and its based applications, companies are using Internet to reach across the borders so that they can find the best supplier through which they can gain economies of scale. With the use of the Internet based host of technology applications, the ISO companies can revamp their operations and save a lot of money. With the globalization competition increasing as well, the ISP’s will make productive use of mergers and acquisitions, acquire the small ISP’s, and can enter the new markets. By launching initiatives and innovative technologies, these ISP’s can expand their operation into further expanding countries and markets. By adopting latest technologies the ISP can alter the industry setting, producing exceptional products with lower cost, therefore become frontiers of a new industry. The technological development and innovations can be utilized in distribution channels, logistics and other functions of the company.
The various strategies and innovative methods adopted by the Internet provider industry will help gain a competitive edge in the market. With strategy mergers and acquisitions, the internet providers has been able to gain a steady growth in both terms of geographical and customer base. This industry is trying hard to win an extended customer base by providing value, services, and content services (Erik, 1999). They also sign deals with the entertainment industries and information companies to gain a win with customers’ interests. Examples provided to customers are e-banking services, e-commerce, bundled services, etc.
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