After years of very high growth rates, the Western European Internet market has slowed down significantly. We estimate that it recorded net additions of 10% in 2004, bringing the total number of active Internet users in Europe to approximately 118 million.

This research focuses on the question of whether a pan-European business model constitutes a sensible business case. Our research suggests that the pan-European ISP model risks margin dilution and a negative return on capital employed.

Key messages

Incumbent-owned pan-European ISPs remain the largest players in Europe. This gives them a head-start in broadband services However, alternative pan-European ISPs are experiencing stronger broadband growth The gap between alternative and incumbent-owned pan-European ISPs is closing.