May 1998

An Internet Service Smorgasbord

By Marc Phillips

Australian Internet users are set to enjoy more benefits from their subscriptions to Internet Service Providers (ISP’s) in 1998. The imminent Australian launch of America Online (AOL), the multi country conglomerate with over 10 million subscribers worldwide, OzEmail’s recent acquisition of Access One and the impressive growth of Telstra’s Big Pond subscription base will together see innovative services offered to end users.

We are rapidly moving to a smorgasbord of value added offerings by Australian ISP’s which will please all of us. Many heavy users have long since envied the fixed fee unlimited access pricing enjoyed by the North American market. "All-you-can-eat" pricing models, where users pay a set fee per month for uninterrupted access, should be available to Australian Internet users this year. This is a significant step towards the dial up subscription service being little more than a communications commodity that users can purchase at the most economical rate.

There are clear signs of the early stages of this trend. Last week, I was pleasantly surprised to receive a newsletter from my One.Net. It offered me a range of special rates on various services such as an introductory offer to sample Multiplay, the online gaming service. It was the first time that I had received anything from them apart from their invoices.

Further evidence of this trend developing serious momentum is OzEmail’s “we give you more” advertising strategy which points to the ensuing battle for the Internet consumer who are now demanding more value added services. The concept of value adding services to the membership base is now a vital point of differentiation for Australian ISP’s. The execution of their business plans will benefit the Internet consumer with not only better hourly access rates but with a broad range of products and services.

Regardless of the often speculated rationalisation of the industry, the main game for ISP’s is to ensure that their retention rate of subscribers remain in the next 12 months. With the largest ISP in the world opening their office in Australia shortly, America Online is sure to build a loyal membership base already familiar with their quality services.

According to Lyn Cameron, General Manager of AOL, “we are an Internet company that provide customer service as a core part of our business model. Integral to our business is providing original content with a sense of community. Customers can interact with the content via messaging and chat groups as opposed to simply reading it.”

To ensure sufficient revenue to keep larger themselves profitable, ISP’s will be forced to create promotional campaigns and further niche their market segment. For example, OzEmail recently launched a press campaign targeting the seniors market with the pitch that "it's never been easier to get online" -with a catchy consumer benefit promoting the Internet as a way to "keep in touch with family."

As one third of Internet users access the world wide web, it’s important we also consider what 1998 will bring for the business market. Of the 800,000+ small to medium businesses in Australia, they are an increasing target market for ISP’s. From my research, I have discovered that the corporate market are increasingly demanding a value added ISP and small to medium ISP’s that don't differentiate themselves from the larger ISP’s will either be eliminated or acquired.

The smarter operators differentiate ourselves by value adding products and leveraging high levels of personalised service. One ISP that does this is Sydney based, Real Net Access, who partner with their clients to maximise their online business and provide them with Internet strategies which allow them to achieve their business goals more effectively.

According to Steen Andersson, CEO, Real Net Access, “with this strategy we are able to consistently grow our client base without threat from the bigger ISP’s. Our clients want more than Internet access, they want complete Internet business solutions. This is good news for the 95 per cent of Australia’s workforce who are employed in organisations that have fewer than 25 staff.

However, there appears to be many small ISP’s struggling to substantiate business plans in the climate of constant change. I have heard recently of a meeting of up to 50  small Australian ISP's trying to find ways to be profitable at this end of the market. To their dismay many have not found any long term viable solutions and hence are reputedly considering closing down!

Over time the low margins in the Internet access market combined with high marketing and service costs will drive ISP’s to seek additional revenue streams. This is already prompting ISP’s to be involved in areas such as E-Commerce and online advertising. Telstra’s newly launched SureLink e-commerce merchant system is being used by 35 businesses whilst OzEmail’s ANZWERS search engine generates revenue from hosting online advertising. SureLink offers users a secure way of purchasing products such as CD’s from JB HiFi, books from Angus & Robertson and wines from Philip Murphy Wines and Spirits.

The ISP of tomorrow may well be your television station. Let’s look at Nine MSN, the joint venture between Microsoft and Kerry Packer’s Channel Nine and a range of his magazine titles including Dolly and Australian Gourmet Traveller. NineMSN offer subscription based services including dial up access which they pass through to Telstra BigPond as their preferred ISP.

It is only a matter of time before the other free to air network television stations will have to seriously consider (if they are not already) offering their viewers a range of interactive content. Television stations have the content and a following of viewers. If the television stations became ISP’s it would also provide more content rich information and offering on the Internet. This would definitely help move the Internet being viewed via the monitor into the lounge room as well as the stand alone PC. The increased penetration of Internet use via each household member using the Internet would definitely lead to better services being offered by ISP’s and content providers.

One of the important aspects that users should be aware of when choosing an ISP in the future is their potential to be spammed. Many customers are getting very disturbed by the increasing amount of unsolicited email (spam). Although WebCentral are an excellent ISP, with the introduction of their new massive 100Megabyte link, they are finding an increase in the number of overseas spammers using their mail servers to send huge amounts of unsolicited mail to people around the world. 

Undoubtedly, there are many issues attached to choosing the right ISP and with the turbulent environment Australia’s 400+ ISP are operating in, the Australian Internet consumer is set to finally be a winner in the maturing of the Internet access market in 1998. With AOL anticipated combination of proprietary content, low fees and relentless co-operative marketing with their content partners, the scene is set for a customer focused battle amongst the Australian Internet service providers. As they say “Let’s get ready to rumble!”

For further information contact APT Strategies at info@aptstrategies.com.au