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U.S. ISPs invade European market

"The Americans are coming" is the cry ringing throughout Europe as American Internet services arrive in droves, seeking to rake in overseas customers and their money.

"The Americans are coming." That's the cry ringing throughout Europe as American Internet services arrive in droves, seeking to rake in overseas customers and their money.

In the latest example, PSINet (PSIX) today announced it is teaming up with The Chatterjee Group, affiliated with financier George Soros, to build a $100 million Internet network across Europe.

Soros's involvement is a big vote of confidence for the European market's potential. One of the most savvy investors around, Soros lately has been touting the moneymaking potential for phone company expansion in developing Eastern bloc countries.

For U.S. ISPs, the time is right. Besides being in the throes of deregulation, the European market is relatively untapped, and American companies have technical know-how that can help expand the market. The PSI deal comes amid other European expansions by companies such as CompuServe, UUNet, and Netcom.

"The European market is enormous and growing faster than the U.S. domestic market," PSI chief executive Bill Schrader said today. "Our experience in Europe indicates that most businesses will make their decision to use the Internet for their data communications requirements at some point during the next three years."

Merrill Lynch, which PSI retained to help boost its profits and stock price, helped broker the partnership. "This agreement is designed to take advantage of the rapidly changing regulatory and competitive marketplace across Europe," said David Kunkel, PSINet's general counsel.

"The market isn't as competitive as the United States yet, and U.S. ISPs are perceived as having technical expertise that is lacking in Europe," David Simons, managing director of Digital Video Investments, a money management research firm, said today.

Europe provides good demographics for ISPs, too. Europeans generally are well-educated, well-read and like to communicate. Many of them are adept at using technology, too.

One example: Minitel, which was launched years ago in France, allows users to send and receive email, shop online, and look up train schedules. That concept now is coming to the United States in the form of network computers.

PSINet is not alone in seeing the potential. As previously reported by CNET, CompuServe said it too would expand in Europe.

The plans include a network upgrade; enhanced European IP capabilities; expanded Internet and intranet authorings, including authentication; and NT Link, the new remote access package based on Microsoft NT.

"This upgrade reaffirms CompuServe's commitment to our European customers, and we will continue to make similar upgrades in the near future," said Jason Comstock, CompuServe product manager.

In May, Netcom announced the extension of services into the United Kingdom through its local subsidiary. The company is offering access through a network in concert with Energis, a local telco.