Cahners In-Stat Group segments the ISP market by function and scope. Functionally the market can be divided between marketing and network-level ISPs. Marketing-level ISPs function at the lowest level of the Internet. These are any companies that sell Internet access, and do not need to operate a network. Network-level ISPs not only function at the marketing level, but also operate a network. Segmenting ISPs by scope divides them between national and regional coverage. National-level ISPs market services in 26 or more area codes. Regional ISPs operate in 25 or fewer area codes.

The market will see the bulk of the ISP market revenue growth coming from business services. Consumer revenue growth will continue to slow down, as consumer access becomes a commodity.

Business Internet revenues continue to be more diverse than consumer revenues. Just over half of all business revenues come from access. The migration of business activities to the Web has increased the importance of hosting, which now accounts for close to 30 percent of all business revenues.

On the consumer front the story remains access. Consumers are still not willing to pay for value-added services. Access subscriptions account for close to 70 percent of all consumer revenues. ISPs are not relying on one access technology, but are instead moving toward offering multiple access technologies, such as wireless, DSL, and cable. Despite this fact, consumers are still primarily using dial-up connections to access the Internet.