Recently Scott McNealy, predicting consolidation in the ISP market, was quoted
as saying that we no more needed 700 ISPs than we needed 700 electric power
companies. That’s an interesting analogy when you consider that the electric
power industry, now approaching deregulation, is probably approaching 700 companies
itself, many of whom don’t even own power facilities.
As usually, Scott is being quotable. Realistically, as more detailed comments
have indicated, it’s the medium sized ISPs that are likely to consolidate. Smaller
ISPs serve niche markets and personalized service that are not likely to be
attacked by the larger players. I don’t believe the numbers of small ISPs are
likely to decrease, in fact, as I sit here after just having driven through
the sparsely settled high-plains of Utah, I suspect that the market for small
ISPs is far from saturated.
It’s dangerous to judge the progression of the internet by the progression
of businesses past. While it’s true that in areas of high competition, the service
and hardware requirements for an ISP are high. It is also true that in many
areas, anyone with a leased line and a couple of modems can still become an
ISP. While all eyes are turned towards the big IPOs, it’s the small businesses
that will keep the internet alive.
[2017: I was wrong. In fact McNealy was wrong, it’s more like 50.]