fwiw- Internet backbone upgrades in the news:
from www4.zdnet.com
(Inter@ctive Week, July 24)
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PSINet Swaps Equity Stake For Capacity
By Tom Steinert-Threlkeld
1:30 PM EDT
PSINet Inc. appears to have avoided the need to merge with a large telephone company, choosing instead to swap a 20 percent stake in itself for an irrevocable right to use 10,000 miles of extremely high-speed fiber communications lines crisscrossing the country.
The Herndon, Va., Internet access provider said it exchanged the 20 percent stake, worth about $240 million, for the right to use extensive communications capacity provided by IXC Communications Inc., an Austin, Texas, provider of communications backbones for regional and national telephone companies.
The swap of the equity stake for capacity neatly sidesteps the possibility that PSINet would have to sell all or a majority of its shares to a local or long-distance telephone company. The imperative, according to analysts such as Joel Maloff of the Maloff Co. in Ann Arbor, Mich., had been to achieve economic parity with companies providing access to the Internet that owned their own communications facilities.
In the past year-and-a-half, PSINet has been rumored to be in talks to be acquired by a number of such companies, ranging from Bell Atlantic Corp. to AT&T Corp.
"We can own our own facilities without being bought by a telco,'' said PSINet director of corporate marketing Tony Kelly. "The assumption was the only route was to be acquired.''
In the deal, PSINet acquires the right to use communications pipes that can handle the equivalent of 2.4 billion bits of data a second, about 50 times the capacity of backbones widely in use today on the Internet.
PSINet will have the right to use the 10,000 miles of fiber for 20 years. PSINet chairman William L. Schrader said, in a statement, that the capacity "will provide bandwidth for the foreseeable future for all conceivable advances in Internet applications.''
As part of the agreement, IXC will have the right to resell PSINet's Internet access services. But PSINet gave no estimate of how much revenue this might produce annually.
PSINet is precluded from using the lines to provide private line or long-distance telephone services that might compete with IXC.
Speculation that PSINet would have to be acquired has been fueled in part by persistent losses for the access provider. In the first six months of its current fiscal year, the company reported a net loss of $20.6 million on revenue of $55.1 million.
But its performance is improving. In the same period a year ago, the company lost $25.8 million on revenue of $37.4 million.
PSINet serves corporate customers as well as consumer-oriented Internet access providers, such as EarthLink Network Inc. and MindSpring Enterprises Inc.
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Steve |
