Briefing on the internet economy Internet service providers Q2. 2002

01. 07. 2002.

In association with Webigen Inc. and Sun Microsystems Hungary, GKI Economic Research Co. conducts quarterly surveys on internet usage and the development of the electronic economy in Hungary. This report summarizes the survey results pertaining to internet and cable TV service providers.

Online service providers once again say that competition is strongest in the area of internet services, and expect this to intensify in the period ahead. In the areas of content production, web design and online advertising, internet service providers expect competition to be strong but somewhat less intense than in the previous quarter. Internet service providers say that the competition is currently moderate in e-commerce (B2B, B2C), but both markets are expected to face more intense competition in the future.

Subscription fees make up the bulk of the revenues for internet service providers. Although this revenue type will remain dominant, revenues from data transfer,  website development and maintenance will account for an increasing percentage over the period of the next twelve months.

Based on the responses, service development spending will continue to rise over the next twelve months. Expenditures on network development and hardware purchases are expected to increase at a slower rate. Software expenditures will likely see the sharpest rise.

At present, 16% of the responding internet providers offer VoIP (Voice over Internet Protocol) service. 54% of those that have not done so are planning to add this service to their portfolio within a year.

Almost half of the responding companies think that the new Unified Telecommunications Act will result in price cuts and increasing business volume. The other half of the respondents, on the other hand, believe that the new act will not have a short-term impact on their markets or without knowing the corresponding ministerial regulations these effect are not predictable.