European Internet Access Market Continues to Grow Rapidly, Despite Industry Fallouts, IDC Says

LONDON – MAY 23, 2001 – According to IDC, the European Internet access market (consumer and business services via dial, broadband, and leased line connections) continues to get stronger, with a 30% compound annual growth rate through IDC’s 2000-2005 forecast period. Growth is driven by increasing numbers of new users joining the Internet, the success of subscription-free and unmetered access services, the emergence of broadband access technologies, and continuing price erosion of leased line and other forms of access. Dial will remain the dominant access method for consumers and very small businesses through 2005.


"Although the broadband market will grow at a slightly lower rate than initially expected, the trend toward replacing both dial and leased line services primarily with cable and DSL alternatives will not change," said Ariane Afrough, senior research analyst for IDC’s European IP Services program. "This trend will initially be driven by higher bandwidth and always-on connectivity, but later it will be increasingly driven by the availability of services and content that are highly dependent on low latency and predictable performance for the home and small business markets."

The European IP services industry experienced fallouts for the first time last year with investment failures and drops in share prices and threats of economic slowdown. High-profile failures such as iaxis and Aduronet contributed to investor caution, yet industry consensus holds that several European IP service providers have been undeservedly marked down despite their continuing high growth. This may accelerate consolidation by making previously expensive providers cheaper, but it also limits funds necessary to complete acquisitions. "For service providers, as for most companies operating in or on the fringes of the new economy, operating profit and cash in the bank are increasing in importance," Afrough said.

Key Characteristics of the European Internet Access Market

The emergence of flate-rate unmetered dial

Continuing delays in local loop unbundling (LLU) and unmetered dial wholesale in some countries

Slow broadband rollout due to LLU delays and the slow development of DSL wholesale in some countries

Continuing falling leased line circuit prices

Ongoing consolidation creating a clear tier 1 of leading access providers in the consumer market (T-Online, Tiscali, AOL, Terra/Lycos, Wanadoo)

Post-Internet bubble investor caution contributing to some high-profile failures (e.g. iaxis and Aduronet) as well as dramatic stock collapses (e.g., GTS and PSINet)

An increasing move by incumbents to carve out IP business units

European Internet Access Market, 2000-2005 (IDC #HP01H) sizes, forecasts, and analyzes the Western European markets for consumer and business Internet access services via dial, broadband, and leased line connections. In addition, the report includes an analysis of key market developments, profiles of leading pan-European service providers, and an overview of market, regulatory, and unbundling conditions for 16 Western European countries. This report is available to purchase from your local IDC office.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world’s leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at

IDC is a division of IDG, the world's leading IT media, research and exposition company.


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