Struggling to Remain Competitive: A Study of Factors Impeding Growth for Canadian Internet Service Providers - ARCHIVED

Today, the phrases 'Fierce competition' and 'Internet access provision' are synonymous. The vastly changing Internet-access market is no longer the domain of its original pioneers - the so called 'traditional' Internet service providers (ISPs). As cable firms, telecommunication carriers and, more recently, wireless carriers flood the market, the business challenges facing firms classified to the ISP industry continue to mount.

Utilizing data from the 2001 Annual Survey of Internet Service Providers and Related Services, this paper examines some of these challenges by exploring various industry characteristics in conjunction with important issues for future growth. The primary focus of this paper revolves is the industry's perception of factors that impede the growth of businesses and highlights the significant distinguishing characteristics among small, medium and large-sized firms. Examination of responses from firms revealed five principal obstacles to growth: 1) competition; 2) cost-related impediments revolving around both ends of the ISP business, their links to consumers and their links to the Internet; 3) delays in obtaining facilities from suppliers; 4) access to financing; and 5) access to markets.

To provide additional context to the main analysis, the paper also contains background information on the demand and supply side of the Internet-access market, financial performance analysis and structure of the ISP industry.