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. Last Updated: 07/27/2016

Web Use Rising Faster Than Provider Profits

Revenues from Internet access services are expected to rise 10 percent year on year to $600 million this year, even though the amount of users is growing much faster, the IDC research company said Wednesday.

Rates for carrying Internet traffic are falling, canceling much of the revenues from the rise in volume, said Simon Baker, a senior analyst at IDC Russia, IDC's local branch.

IDC did not give exact figures for the expected rise in Internet users, but Internet statistics company Spylog is expecting a 33 percent year-on-year increase to 10 million users by the end of 2002.

The IDC singled out private Internet use as growing particularly fast, saying there are now as many PCs connected to the Internet at home as there are among businesses.

Baker said Internet revenues nevertheless continue to come overwhelmingly from corporate use.

Providing Internet connections to home users, especially in the regions, is a growth area, but the market is competitive and provides little profit, Baker said.

Most of the revenues will continue to come from corporate users in the next five years, the IDC said.

The report also revealed that Russia's penetration of Internet broadband access is much lower than in most of Europe.

"The great majority of users will continue to gain access to the Internet via conventional dial-up connections," Baker said.

Broadband -- in particular digital subscriber lines, which allow high-speed access over normal public telephone lines -- is growing much quicker in the corporate market than among individual users.

Less than 1 percent of individual users have broadband connections, and the figure is unlikely to increase significantly soon, Baker said.

This "is largely because of restrictions on who can offer such services on the public city networks and high prices, for instance, in Moscow," he said.

The situation is a bit different in the corporate market, where alternative telecoms operators can offer DSL to customers who already are subscribed to their networks, he said.