Rapid Growth on Internet Taxes Service

Netcom On-Line Communication Services Inc.’s network-wide outage last week serves as a warning sign of the difficulties even the largest Internet service providers face in meeting soaring growth rates.

The San Jose-based Internet access provider said the outage--which lasted more than 13 hours, including the “prime time” for home usage on Tuesday evening--had ended by Wednesday morning, but acknowledged it was an embarrassment that could hurt its reputation.

Internet experts predict that such blackouts and brownouts will become more common.

With more than 400,000 subscribers, Netcom is the largest of the “Internet-only” service providers in the country, and the company is responding to mounting pressure from new rivals by even more aggressive growth plans.

“There’s so much market growth that there’s room for a number of competitors,” Netcom Chairman David Garrison said last week. “The business is growing so rapidly, we think there will be a lot of competitors.”

Indeed, market research by San Francisco-based Hambrecht & Quist projects “the demand for network services will be seemingly insatiable for the foreseeable future,” with the number of e-mail targets on the Internet rising tenfold to 300 million within five years.