SAN JOSE, CALIFORNIA -- The long-predicted shakeout in the Internet service provider business won't happen until Net access technologies mature to the mythical plug-and-play simplicity that consumers have been promised for years.
That was the central theme emerging on the first day of the fall 1998 Internet Service Provider Convention, a gathering of networking gurus, telco executives and venture capitalists, and small-time entrepreneurs who put the squeal into millions of modems across the country.
"Until the technology matures, you cannot have a useful consolidation or a reduction of the number of players. In fact, it's going in the other direction," said conference founder Jack Rickard, editor of Boardwatch Magazine, the trade mag of the ISP business.
Rickard debunked the conventional industry wisdom that, thanks to sheer economies of scale, the phone companies will inevitably crush or scarf up the small ISP operations.
But it's still too tricky to configure a dialup connection on an older computer, or string a T1 line into a small business. Because of these hands-on service and support demands, so-called "boutique" ISPs have stayed in the black. Difficult configurations are both the bane -- and the salvation -- of small Internet shops.
"The whole concept of consolidation -- everything boiling down to AT&T ... to me is comical," said Rickard.
But both Rickard and fellow keynoter John Sidgmore, president and CEO of Internet backbone service supplier UUNet, said that convergence with telcos was inevitable.
"You're all going to wind up being telephone companies," said Rickard. "The problem is they're [the phone companies] all going to become ISPs."
Sidgmore said that his UUNet is out to supply "local, long distance, and Internet -- all in a seamless way, all integrated on a single bill."
But before that can happen, ISPs must stare down another challenge -- how to handle runaway demand for network access and bandwidth. Sidgmore said that his company's bandwidth demand doubles every three and a half months, a growth rate he put at 1,000 percent annually.
"No technology has grown this fast, we think, in history," Sidgmore said.
The traffic figures point to existing customers using their Internet connections more often, but also to greater demand from a steady stream of new subscribers.
He added that, on a deeper level, the rosy outlook for companies like his can be pegged to fundamental changes in the business landscape.
For the first time, the Internet gives businesses the ability to access all its customers and employees through a public network, he said. Thanks to the Net, upstart businesses can take away the power of long-standing business monopolies.
"That's why there's no way this is gong to slow down over the next couple of years. The Internet has become a dominant piece of the entire communications industry."
