Coming off a spectacular 67% increase in 1999, revenues in the U.S. Internet services market will increase another 29% in 2000, approaching the $23 billion mark, according to International Data Corp. (IDC), an information technology research and consulting firm in Framingham, Mass. America Online and UUNet will continue to lead the market's drive, having a commanding lead over their competitors in the consumer and business Internet-access market segments respectively. "The most striking development in the ISP market has to be the continuing dominance of UUNet and AOL in their respective market segments," says Steven Harris, IDC analyst, business network services research. "America Online is by far the largest consumer-oriented ISP, and UUNet dominates the market for business access, wholesale services, and value-added services by large margins over the No. 2 carrier in each segment." Accounting for 40% of consumer access subscribers, America Online's share is more than the next 20 largest ISPs' combined share, according to the report. UUNet controls 26% of revenues in the business segment, 43% in the wholesale segment, and 17% in the value-added services market, about double the share of the nearest competitor in each market. As the consumer ISP market consolidates, AOL will face larger rivals, but none will seriously threaten its dominance, suggests IDC. An increasing number of ISPs will enter the other markets, and UUNet will be challenged, especially in the business access and wholesale segments.
