Government stuff and the cost to ISPs

I try and keep the content of this blog varied. One of the nice things about my job is that I am able to do this.

One of the recurring themes though relates to regulation.  As a board member of the ISP Association I get a lot of visibility of things going on here.  In fact a huge amount of the value that ISPA provides to the industry lies in the fact that the it does so much work in this area – thus removing the need for all ISPs to be expert. 

It is undeniable however that the regulatory pressure on ISPs is increasing and at some point this is going to start having a serious effect.  This week alone the subjects being discussed in Parliament include the Intercept Modernisation Programme (Big Brother is watching you), Music Piracy, website filtering under the Terrorism Act and Safety Online. I am afraid that in the medium to long term the cost of all this regulation (or proposed regulation) is going to mean that only larger ISPs can cope with it. 

The industry is already struggling with the network upgrade costs associated with increased use of the internet (iPlayer,SkyPlayer, interactive gaming etc etc).  A small ISP with perhaps only two or three thousand customers – and there are many of these – can’t afford the capital expense associated with this. Timico has already made three acquisitions of such ISPs.

Not everybody is fortunate to have the same private equity support and ambition as Timico and I predict that within the next five years the number of UK ISPs will shrink significantly, perhaps to fewer than 50 (from maybe 300 today). I see this as a real business opportunity because in actual fact the market is going to grow. It is just that the barrier to entry will get higher.

Published by Trefor Davies

Liver of life, father of four, CTO of trefor.net, writer, poet, philosopherontap.com

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