September 10, 1998
ABOVENET COMMUNICATIONS INC (ABOV)
S-1 Filing (SEC form S1)
AboveNet is a leading provider of high performance, managed co-location and Internet
connectivity solutions for electronic commerce and other mission-critical Internet
operations. AboveNet has developed a network architecture based upon two strategically
located, fault-tolerant facilities that combine content co-location services with direct ISP
access to create Internet Service Exchanges ("ISXs"). As of August 31, 1998, the Company
had approximately 160 public and private data exchange connections, known as peering
arrangements, including relationships with top-tier network providers. The Company's
network architecture and extensive peering relationships are designed to reduce the number
of network connections or "hops" for data travelling across the Internet. Furthermore, the
convergence of content providers and ISPs at AboveNet's ISXs enables these ISPs to
provide their users with "one hop" connectivity, through AboveNet's local area network, to
the co-located content site. As of August 31, 1998, the Company had approximately 300
customers including a wide range of Internet content providers, Web hosting companies and
ISPs. The Internet has experienced tremendous growth and is emerging as a global medium
for communications and commerce. Internet-based businesses and other enterprises need
non-stop, non-congested, fault-tolerant and scalable Internet operations to allow them to
perform mission-critical digital communication and electronic commerce transactions
globally over the Internet. However, many businesses that are seeking to establish these
sophisticated Internet operations lack the resources and expertise to cost-effectively
develop, maintain and enhance the necessary facilities and network systems. As a result,
many enterprises are seeking outsourcing arrangements to enhance Web site reliability and
performance, provide continuous operation of their Internet solutions and reduce related
operating expenses. Forrester Research, Inc. estimates that by 2002, approximately 40% of
complex Web sites will be outsourced and that Internet hosting revenues for complex sites
will increase from approximately $200 million in 1997 to approximately $8.0 billion by
2002. AboveNet's solutions are designed to be highly scalable and flexible to meet the needs
of its customers as their Internet operations expand. AboveNet charges its customers based
on space and bandwidth utilization, providing customers a flexible, cost-effective path to
increasing their Internet operations. The Company's services are designed to enhance
performance through redundant and high speed network design and 24x7 monitoring,
notification and diagnosis. AboveNet's proprietary ASAP software monitors all of the
Company's direct and indirect network connections for latency and packet loss, allowing its
network engineers to enhance performance by dynamically rerouting traffic to avoid
congested points. The Company also provides its customers with sophisticated monitoring,
reporting and management tools that can be remotely accessed by the customer to control its
Internet operations. By providing a means to reduce the number of "hops" in the transmission
of data, the Company believes that its network design can provide significant benefits to
ISPs as they seek to gain fast, reliable access to content. The Company's objective is to
become the leading global Internet Service Exchange for business enterprises and ISPs that
require high-bandwidth, mission-critical Internet operations. To achieve this objective, the
Company intends to: (i) increase awareness of the AboveNet name on a global basis; (ii)
expand its customer base through increased sales and marketing efforts; (iii) expand its
global ISX network by connecting centralized facilities in key domestic and international
locations; (iv) leverage its ISX model to increase its customer base and generate recurring
revenues; and (v) address the emerging requirements of Internet technologies such as audio
and video streaming and voice over IP. The Company's customers include CNET
Download.com, Dacom America, Electronic Arts Inc. Got.Net, IntelliChoice, Inc., iXL
Holdings, Inc., Liquid Audio, Inc., RealNetworks, Inc. and The Web Zone, Inc. The
Company intends to expand its customer base by substantially expanding its sales
organization, as well as establishing and expanding relationships with potential channel
partners including hardware vendors, value added resellers, system integrators and Web
hosting companies, to leverage their sales organizations. The Company also plans to invest
in building the AboveNet brand through an integrated marketing plan, including traditional
and online advertising in business and trade publications, trade show participation, direct
mail and public relations campaigns. The Company was incorporated in California in March
1996 and will reincorporate in Delaware prior to this offering. The Company's principal
executive offices are located at 50 W. Fernando Street, Suite #1010, San Jose, California
95113, and its telephone number is (408) 367-6666. EtherValve is a registered trademark of
the Company. Cabriolet and MRTG are trademarks of the Company. The Company has
applied for federal trademark registration for the following names: APS, ASAP,
As-Ur-Here, Internet Service Exchange and ISX. All other trademarks, servicemarks or
tradenames referred to in this Prospectus are the property of their respective owners. |
