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PSINet takes a turn into ASP market

ASHBURN, YA. - PSINet is still a work in progress 11 years after its inception. The latest evidence: This ISP best known for Internet access services, will soon be associated with yet another acronym: ASP.

PSINet is gearing up to offer hosted application services to users around the world, says David Kunkel, vice chairman and executive vice president of PSINet.

Two endeavors are fueling PSINet's application service provider push: its recent acquisition of systems integrator Metamor Worldwide now known as PSINet Consulting Solutions - and the ISP's quest to nearly double its Web-hosting data centers this year.

While competitors such as UUNET and AT&T offer collocation and hosting services only to ASPS, PSINet will offer hosted application services directly to enterprise customers. Although service specifics are not available, the ISP will compete directly with ASPS such as Applicast, Corio and USinternetworking, Kunkel says.

PSINet's emphasis on hosting services should benefit customers, says Brownlee Thomas, an analyst with Giga Information Group, a Cambridge, Mass., consulting firm. Instead of radically overhauling its business, PSINet is focusing on what it already knows, she says. However, PSINet

needs facilities to compete, so CEO William Schrader is promising one million square feet of Web hosting space by year-nd.The space will come from nine data centers PSINet is building in Boston; Dallas; Geneva; Berlin; Paris; Hong Kong; Buenos Aires, Argentina; San Paulo, Brazil; and Sydney Australia. The ISP already has Web-hosting facilities in Atlanta; Herndon, Va.; Los Angeles; New York; Amsterdam; London; Neuchatel, Switzerland; Seoul, Korea; and Toronto.

Boston's Yankee Group estimates that this year PSINet will be tied with Qwest Communications as the Fifth-largest Webhosting service provider in terms of data-center square footage. PSINet's Web hosting sites will not only be used to launch ASP services, but also to support existing e-commerce and Web hosting customers. Kunkel also points out that PSINet will launch unified-messaging services soon. The ISP's global reach is further along than one might expect, because it just finished a 30-month buying spree. PSINet has acquired 75 service providers and a system integrator in that time, most located outside the U.S.

PSINet is fast at work integrating this multitude of ISP net works onto its global backbone.

In Europe we're 90% fully integrated; in Asia Pacific countries we're well under way and at about 75/ integrated," Schrader says.

In Latin America, PSINet is less than 75% integrated, primarily because some of the ISP's recent acquisitions were there, Kunkel says. All of PSINet's international subsidiaries should be "100% integrated in the next six to nine months," he says. "The hardest part is integrating all of the companies onto the same back-end system, such as accounting."

PSINet has bought its way into an attractive position, Giga analyst Thomas says. As a fullfledged global ISP, it may be attractive to potential buyers.

"PSINet has done a good job of remaining an independent ISP long after most competitors were bought up, but the question is, how much longer can it remain independent?" she says.