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Savvy ISPs Find Revenue in P2P File Sharing

The worldwide market for peer-to-peer and file sharing services is expected to generate nearly $28 billion in global revenue for broadband service providers and ISPs over the next five years.

An ever increasing number of forward-looking cellular and wireline service providers are offering file-sharing and downloading services geared to the requirements of their end-users.

According to a new market research study from the Insight Research Corporation, peer-to-peer and file sharing services are widely available on fixed-line and mobile networks. However, success rates vary greatly -- carrier revenue from usage of peer-to-peer and file sharing services in Asia is nearly double the North American revenue.

Insight Research's market analysis study, entitled "Peer to Peer & File-Sharing Services Market 2007-2011," notes that peer-to-peer and file sharing services are part of a worldwide push by innovative carriers to create new IP-enabled services for consumers and business users.

The study notes that consumers of mobile and fixed-line telecommunications services are adopting peer-to-peer and file sharing services along with other IP-enabled services such as video telephony, fixed-mobile convergence, presence, streaming, and location based services.

"Peer-to-peer and file sharing services have moved into the mainstream and are now well beyond the early days when a few of the service providers ended up in litigation" says Robert Rosenberg, president of Insight Research.

"Peering and file sharing have now been embraced by fixed-line and wireless operators, many of the intellectual property issues that led to legal fights have been resolved, and media and applications such as ring tones, games, music and large file videos are taking off. We see this market continuing to grow as consumers increasing rely on the utility of these applications," Rosenberg concluded.

This global market trend is in sync with the broadband sector overall -- where the successful market leaders are in the Asia-Pacific region, with Europe closely following, and North America as the apparent laggard. Again, there is much that U.S. service providers can learn from their counterparts.

I believe the under-performing American market for value-added services still points to tremendous upside potential. But, it's less related to problems associated with demand, and more about supply related issues. While some blunt analysts likely would point to inept product marketing, I would describe the U.S. situation differently.

U.S. service providers must raise the bar of expectations for their product development and market development metrics. Instead of benchmarking with their U.S. peers -- the lowest common denominator -- they should instead compare their business model and associated performance to the recognized global market leaders.

It's somewhat ironic, because the U.S. broadband service provider's success with influencing the nations public policy and regulatory landscape has actually worked against their ability to truly innovate. In the absence of a vibrant and challenging competitive environment, it's predictable that incumbent providers would fall into complacency.

That said, few if any executive leaders at the U.S. broadband duopoly providers seem to fear their own inability to innovate more than they fear the threat of real and unfettered open competition. That's a sad testament to the current situation.

In contrast, a realist would acknowledge that being #1 in your protected market within the U.S. is unlikely to gain any lasting credibility within the borderless Global Networked Economy.

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