December 9, 1996
Another Nail in the small ISP Coffin
By Bob O'Donnell
A little news
item crossed my desk last week that points to an increasingly bleak future for smaller
ISPs and a more costly Internet for the rest of us. The story wasn't reported widely -- in
fact, we didn't do anything on InfoWorld Electric nor did any of our primary competitors
-- but I think it may eventually impact lots of IS departments and end-users around the
Here's the deal: Viacom, the parent company of MTV
and other cable television networks, is planning to ask ISPs to pay access fees to Viacom
Web sites. In other words, before I can visit a Viacom Web site, such as Paramount, Prentice
Hall or The Sci-Fi Channel, my ISP would have to
pay Viacom money. And if it doesn't, Viacom will block access to all customers of that
ISP. The analogy is very similar to cable TV: If a cable company wants to offer any of
Viacom's cable TV channels to its customers, it has to pay Viacom for the privilege.
The initial plan is to attract the largest ISPs and online services; what wasn't clear
from the story is whether or not Viacom plans to allow in -- or -- block customers of
smaller ISPs. Regardless of the initial plans, though, Viacom will probably eventually
block access to anyone who doesn't come through an ISP that pays the access fees.
Of course, this concept may never fly on the Web, but if it does, the implications are
fairly staggering -- and not just for end-users. Even though most of Viacom's sites are
consumer-oriented, and thus not directly relevant to business, you could bet very good
money that if the concept starts to fly, it will quickly be applied to sites that offer
services for business, including research, news, and other important information. The
reason is simple: Viacom's argument for considering this scheme is based on real business
problems. The company points out that advertising on the Web is not and, likely, will not
support the costs of creating and maintaining its sites, so Viacom needs to find other
sources of income.
That may not match what everyone initially expected, but as anyone working on the Web
full time can tell you; it's reality. Somebody has got to pay for the development of the
content and the management of the site, or companies won't be able to justify the
continued expense of Web sites and the sites will start to disappear. And even if Viacom's
system doesn't fly, it will undoubtedly lead to other ideas about how to make money from
The truth is, content companies are watching all the various attempts to charge access
fee/subscriptions like hawks and many will dive in as soon as they see some degree of
success or even a lack of serious resistance.
The result will be higher access costs as ISPs pass along these costs to their
customers, and a Web where you pay as you go. A cost-efficient micropayment system, where
visits to Web pages cost cents or fractions of a cent, needs to be in place before all of
this can happen, but we're not far from that goal. Companies such as CyberCash, will soon permit content or vendor sites to
start charging per visit, or even page accessed.
In addition, smaller ISPs, which are now trying to compete on price alone, are going to
get squeezed even tighter by these additional costs, and many will probably be forced out
of business, leaving fewer choices for both consumers and businesses. ISPs will no doubt
fight this effort, and it may even serve as a rallying point to bring them together and
work on other issues. But the future for smaller ISPs is looking pretty grim.
© Copyright 1996, by InfoWorld Publishing Corp., a
subsidiary of IDG Communications, Inc. Reprinted from InfoWorld,
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