There are now some 4,000 Internet Service Providers (ISPs) in Europe, according to the latest number crunching from Cambridge-based researchers Analysys.

While the number of ISPs in Europe grew by a third last year, the number of subscribers jumped by 75 per cent to 34.5 million. Net users, as a whole, increased by 69 per cent to 64.3 million over the same period.

In the UK, the Internet penetration rate was 25 per cent, at the end of 1999.

Dr Philip Lakelin, of Analysys, said: "The Western European Internet market still shows significant potential for growth, since it continues to lag behind the 45 per cent penetration on rates in the USA."

"The economics of the Internet industry have changed dramatically. Within the dial-up market, revenue from Internet access is starting to disappear. Companies are being forced to absorb the cost of free-access provision and regard it as a marketing cost for other revenue-earning services, such as advertising and ecommerce.

"Within the business market, margins for basic access are rapidly declining and ISPs are having to work hard to open up new service sectors, such as applications hosting and content management.

ISPs must take risks, forge the right partnerships and continuously innovate,if they are to survive, he said. ®