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UUNet goes the extra Net

UUNet's chief executive predicts that hosting services will become the fastest growing business for ISPs as the industry reconfigures in the next three years.

NEW YORK--Hosting Web sites for companies looking to get on the Net will become an increasingly important business for UUNet Technologies and other Internet service providers, UUNet CEO John Sidgmore predicted today in his keynote address at Fall Internet World.

"Hosting will increasingly become a huge piece of our business, and eventually it will grow [to be] the fastest of our segments," Sidgmore said, adding that he expects consumer ISP rates to rise in the next few years while business prices stabilize.

"Bandwidth will become more precious because we are moving from a demand-driven to supply-driven market," he said.

Sidgmore also announced two new "extranet" services for companies to link to their business partners using Internet protocols over UUNet's Internet backbone as a "virtual private network." The "ExtraLink" service will give companies a dedicated service, while the "ExtraLink Remote" is the dial-up option.

The services will be commercially available in the United States in February, with international rollout by July.

On Monday, UUNet's parent, MFS Communications (MFST) announced a new commercial service to offer higher-speed Internet access over traditional phone lines, bypassing local phone carriers to use MFS's local network in 200 major U.S. markets. The new "unswitched xDSL service," due to launch by March, initially will offer ISDN speed connections.

Like most analysts, Sidgmore predicts a massive shakeout among Internet service providers, one that would cut today's 1,000 ISPs to several hundred in three years.

He predicted that ISPs that own facilities and infrastructure will survive, citing these factors as key in MFS's decision to acquire UUNet in April for $2 billion. MFS is currently being bought by long distance carrier WorldCom.

"The merger creates the first major, full-service provider of business communications services in one company," he said. "Our goal is to build a new kind of communications company, one that looks more like a Silicon Valley start-up than a telecommunications company."

Deregulation and the explosion of available bandwidth puts old telecommunications companies at risk, he said. "That's why the telephone carriers have developed Internet strategies. It's not just an opportunity but a threat."

UUNet will continue its "religious focus" on the business market and will resell its capacity to both consumer-oriented ISPs such as EarthLink Network and online services like Microsoft Network, two major UUNet customers.