Internet Services
SIC 4822, 7375
NAICS 517110, 518111
The Internet services industry includes Internet service providers (ISPs), backbone network operators, Web navigation services, Internet security services, and Internet or electronic commerce (e-commerce) providers. Internet service providers may also offer Internet hosting and programming services, e-mail and messaging services, and Web site design services. Companies that use the Internet to promote sales, such as automobile manufacturers allowing customers to price cars online, are not considered part of the industry. For additional information on Internet programming and software, see the entries on Information Technology Services and Packaged Software.
The Internet has been the fastest-growing communications technology in history, according to the U.S. Department of Commerce. Radio was available 38 years before gaining 50 million listeners, and television was available 13 years before gaining that many viewers. The Internet reached the 50-million-user mark in four years. By the end of 1997, more than 102 million people were on the Internet. By the end of 2003, there were 700 million Internet users worldwide. According to some estimates, this number was expected to reach 945 million by the end of 2004 and exceed 1 billion by 2007.
The growth in Internet users is occurring in tandem with an increase in the number of Web sites. According to the August 2004 issue of iStart, during the first half of 2004, domain name registrations for Web sites carrying the ".com" extension increased by 23 percent over the same time period in 2003. In addition, Web sites carrying the ".net" extensions jumped 20 percent from the first half of 2003.
Businesses have been quick to take advantage of the Internet's potential and are realizing significant business cost savings and competitive advantages. The Internet is a driving force behind communication and collaboration, both within and between companies, globalization, and electronic commerce. In 1997 an estimated US$40 billion in global business was transacted over the Internet. By the end of 2004, global business-to-business ("B2B") was expected to bring in US$2.7 trillion, according to eMarketer, with the United States accounting for about US$1 trillion. Although 70 percent of companies had given online purchasing a try by early 2003, some 90 percent of their spending continued to occur offline, according to eMarketer. One survey conducted by Information Strategy revealed that 98 percent of surveyed businesses had some sort of presence on the Internet and that almost half of those had sites offering interactive communication with customers. About 15 percent of those companies actually conducted business over the Internet, although most marketed services as opposed to physical products.
Figures from Nielsen//NetRatings for March 2005 showed that worldwide, 451.5 million people had access to the Internet from a home computer. Users visited an average of 62 unique domain names that month, viewing about 1,148 total Web pages. Also, people spent approximately 26 hours and 55 minutes on their computers, with average Web surfing sessions of 51 minutes and 11 seconds. On average, individual Web pages were viewed for about 44 seconds.
Service providers allow users, who wish to access the Internet to set up their own networks, to get connected. Companies from several major industries, including local and national telecommunications companies, software developers, and cable television companies, joined in providing both businesses and the general public with access to the Internet. Those who did not offer their own services have often pursued joint ventures with other companies to do so. No longer was simple access the issue—speed was as well.
Access to the Internet is achieved in several ways, including dedicated lines and dial-up telephone line access. Dedicated lines include T1 and T3 lines (fiber optic lines to an ISP) and others, such as digital subscriber lines (DSL). Dial-up lines include Integrated Service Digital Network (ISDN) and phone lines with use of a modem.
A "dedicated line" means that rather than dialing into the Internet each time a user or company wants access, a data transmission line is dedicated to the sole purpose of Internet access, and that line is always open. Dedicated or permanent lines provide much greater speed than dial-up access, and greater bandwidth, the amount of data that can be transmitted at one time over the connection. Dial-up access is available on an individual or network basis and runs more slowly than dedicated lines. However, for individuals and some smaller companies, dial-up access to the Internet is sufficient. Considerations when determining what type of access is appropriate include the number of simultaneous users who need access and the type of tasks they perform. For example, some users may need to send and receive large graphics or data files regularly, and a slow connection would impede their productivity.
Internet service providers (ISPs) provide a network connection that allows users to view the Internet and provide a means for people and corporations to sponsor Web sites. Customers either dial in or use their dedicated line to the ISP, which in turn is linked to other ISP systems known as "national ISPs." Many ISPs purchase their access from network operators or national providers that do not serve the general public.
Some companies made a mark in the industry by selling fiber-optic networks and bandwidth to telecommunications and Internet access providers. One company specializing in this market was Qwest Communications, which provided national fiber-optic services to major telecommunications companies such as WorldCom, Sprint, and GTE.
In order to provide easier access to the Internet for educational and nonprofit institutions, the Federal Communications Commission (FCC) announced in 1997 that it would offer free wireless access at 300 megahertz (MHz) of the radio spectrum for short-distance connections. These connections could bring the Internet to schools, hospitals, libraries, and other institutions for which access costs were prohibitive.
Security is one of the primary concerns for businesses pursuing commercial ventures via the Internet. While all companies are interested in taking advantage of this exploding market, they are understandably concerned about public access to private files and competitive information. Such information has become the number one corporate intelligence target. As a result, security services are a growing market in the Internet services arena. Security services include consulting and security system design services, as well as installation of firewalls (a kind of software security structure) and virtual private networks.
Consulting services can include design and maintenance of corporate security policies, network security design, and site audits. Consultants also provide comprehensive external audit services. These audits include evaluating firewalls, detecting "back doors" on internal networks, and validating security tools. Other consultative services offered are host penetration testing and evaluation of internal compliance with corporate security policies.
Firewalls are installed in computer networks to protect internal hosts from unauthorized outside access. The firewall is placed between a corporation's private network and public access via the Internet. Firewalls monitor access to the corporate network and authorized users. Any activity, whether suspicious or regular, can be monitored and reported to network administrators when necessary. Another tool used to enhance network security is the virtual private network (VPN), which is replacing wide-area networks in many corporations. This type of network offers secure connections over the Internet and can connect branch offices, remote users, business partners, and clients on one network.
A global initiative dedicated to the issue of Web security was launched in 1997 by the Electronic Frontier Foundation and CommerceNet, an Internet commerce industry organization. Termed "TRUSTe," the initiative was created to instill confidence in electronic information exchange by dispensing green "trustmarks," or seals of approval, to Web sites following set privacy guidelines. TRUSTe's initial focus was on the general consumer but later was slated to move into Internet commerce security.
One of the most fundamental shifts in the way companies conducted business during the late 1990s and early 2000s arose from the increased practice of online product ordering. This type of business is referred to as e-business, e-commerce, or I-commerce (for Internet commerce). This shift represented a change in business strategy as much as in technology. IBM was among the first companies seeking to profit from the opportunity to provide corporate customers with e-commerce hardware, software, and services.
Established Internet companies such as browser giant Netscape Communications Corporation also shifted service offerings to take advantage of opportunities in electronic commerce. Netscape was positioning its own Web site as an "Internet tollbooth for each transaction to pass through on its way to accessing services deployed on top of enterprise software from...
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