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The Honolulu Advertiser
Posted on: Sunday, June 10, 2001

Internet feeling effects of consolidation

USA Today

Two telltale signs of industry consolidation — fewer firms and higher prices for consumers — are hitting the Internet.

"Big business is buying up the Internet," says analyst Joel Yaffe with Giga Information Group. Where consolidation is showing up:

• Online giants. The number of companies controlling 60 percent of the minutes users in the United States spend online dropped to just 14 in March. That's down from 110 only two years earlier, says a study released Monday by Jupiter Media Metrix. Web sites owned by AOL Time Warner gobbled up 32 percent of online time. And four companies, AOL Time Warner, Microsoft, Yahoo! and Napster, controlled 50 percent.

• Prices. Many large companies are raising Internet access rates. AOL increased its monthly fee by $1.95 last month. AT&T Broadband also raised its price in May, from $39.95 to $45.95 a month. Verizon Communications has stopped promoting its $39.95 package. Instead, it encourages people to sign up for a $49.95 deal. Customers who still want the $39.95 rate must also pay a $200 setup fee. Comcast said Thursday that customers will pay $5 more a month than existing customers starting July 1, raising rates to $44.95.

One reason rates are going up, analysts say, is that consumers are accustomed to having the Internet. And companies no longer risk losing customers.

• No free rides. Internet freebies are disappearing. Free Internet service providers such as FreeInternet

.com, Freewwweb, WorldSpy and 1stUp.com have gone out of business. And companies, including Juno, NetZero, Amazon.com, Microsoft, FreeEdgar, PayMyBills.com and Britannica.com, have started charging for previously free services as they looked to fees because of weakness in online advertising.