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ISPs, you can do better

Both ISPs and the technology vendors who sell to them are looking for The Next Big Thing.

It's been 13 months since my last rebuttal of the "ISPs are dead meat" pundits, and last week's ISPcom trade show served as a reminder that this industry remains lively.

A year ago, it was obvious that at $19.95 a month, the consumer market was a commodity business where big brands--America Online, AT&T WorldNet, and maybe even Earthlink Network--would dominate. Then Web hosting looked like the next ISP business after access.

Today Web hosting looks like a commodity market, so both ISPs and the technology vendors who sell to them are looking for The Next Big Thing. It appears to be some form of application hosting or outsourcing--rent-an-app.

What to call the extra-strength ISP has become an anagram. E-commerce software vendor Open Market coined the term commerce service provider (CSP) for hosting storefronts. Netscape Communications talks up ESPs (enterprise service providers) for MIS departments or ISPs running vast intranets and extranets.

Sun Microsystems dubbed any ISP hosting someone else's application an ASP, for application service provider.

"ISPs are moving up the food chain," Netscape's Marc Andreessen told the ISPcon crowd last week. "In the past several years you've been in the access business; now you're doing Web hosting and hosted email. The next wave is to offer value-added services. Every business in the world will need to go to an ISP for hosted messaging, e-commerce, and Web hosting."

Infonetics Research, a market research and consulting firm, sees VPNs (virtual private networks) and voice over IP as emerging categories for ISPs.

"Voice over IP, once a question of if, has now become a question of when," Infonetics' Greg Howard said in a statement, noting that half of the national ISPs he surveyed expect to offer IP telephony by next year.

IP telephony, the biggest buzz at the show, gives ISPs the technical capacity to handle phone calls over the Net, thus circumventing the switch-based networks of traditional phone carriers.

"IP packets won. The circuit switch didn't win. Voice over IP is going to explode," declared keynoter John Sidgmore, vice chairman of MCI Worldcom and a former ISP himself who thinks circuit switches will hang on for another five years.

"Voice on the Internet will be a niche, not the dominant piece of the Internet industry. There is tremendous room in this industry for lots and lots of ISPs that specialize in one thing or another," Sidgmore added. He says the ISP industry will evolve into something similar to the software industry's myriad of specialties.