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RHK: Internet Growth OK

North American Internet traffic growth on track, but revenues remain flat; AT&T to surpass WorldCom as #1 traffic carrier

July 22, 2002

1 Min Read

SOUTH SAN FRANCISCO -- North American Internet traffic is on track to grow 85 percent in 2002, according to RHK’s quarterly market update report from its Network Traffic & Revenue Analysis program. However revenue growth continues to lag, remaining flat for the year due to pricing pressures, slow rollout of differentiated IP services, and sluggish consolidation.RHK’s findings show industry revenue-per-bit will decline by 46 percent in 2002. Price reductions, better utilization of higher bandwidth pipes by enterprise customers, and declines in wholesale dial-up business as users migrate to broadband access, are all influencing the market. As a result, revenues will remain flat quarter-over-quarter, totaling $15.7 billion for the year.“The major impediment to more rapid revenue growth is strong downward price pressure for Internet services,” says Shing Yin, Senior Analyst for RHK’s Network Traffic & Revenue Analysis program. “However, several emerging industry trends may improve the situation. Service providers are aggressively marketing higher-value differentiated services, such as IP-VPNs, and specializing in high-spending customer segments, such as financial services. Inevitably, pricing plans will become more closely correlated with usage in order to derive greater revenues from the heaviest bandwidth users.” AT&T and WorldCom carry the most traffic in North America, with the companies tied for the number one position, according to RHK’s market analysis. RHK expects AT&T to emerge as the clear leader within the next month or two as a result of its significantly higher growth rate. WorldCom leads in revenues for Internet services (excluding hosting and other value-added services), and is expected to remain the revenue leader through the year. “Any impact on WorldCom’s network and customers due to its current troubles will take months to play out,” Yin says. RHK Inc.

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