Backbone Providers Flex

• GRIC, Lucent Secure to Roam the Globe
• PAIX.net Still NAPping and Proud Of It
• CAIS Casts Off Dead Weight
  

by ISP-Planet Staff [April 14, 2001]

GRIC, Lucent Secure to Roam the Globe
Roaming Internet service for business traveler's is nothing new, but making it secure enough for VPN duty is another thing entirely and something ISPs can offer its subscriber base.

Given the inherent insecurity in remote access Internet communications these days, it's refreshing to see a product come out that promises robust security for mobile workers who need access to their company's enterprise network.

The GRICtraveler VPN solution by GRIC Communications, Inc., allows users dial in from anywhere in the world, for the cost of a local phone call in many cases, and connect to their company's network without giving administrators fits over possible security breaches.

It's a value-add service that has the potential to net ISPs more business customers and keep the ones it already has.

The price for the initial set up, ranging from roughly $24,000 to $90,000, is cost-prohibitive for smaller operations, but for ISPs with an eye to long-term profits, it would be relatively easy to set up and charge small businesses accounts on a per user basis.

The technology, developed by Lucent Technologies, is a combination high-performance security firewall and IPSec client software solution. The security was given a seal of approval from the National Security Agency (NSA) and ICSA, because it utilizes DES encryption algorithms.

With it, users running the Windows operating system login with conventional dialup software, which finds the nearest Point of Presence (POP) only after securing the user's information by way of Secure Sockets Layer (SSL) protocols. The customer then connects to the Internet through an available ISP and the firewall program is automatically launched.

Laura Mellow, GRICtraveler business unit vice president and general manager, said GRIC's alliance of ISPs makes the technology particularly useful for international travelers.

"By offering the GRICtraveler VPN solution, our GRIC alliance network of more than 300 of the world's top-tier ISPs and telecommunications companies will be able to provide their subscribers and enterprise customers with 'single-click, plug-and-go' dialer capabilities, so that they can roam the Internet anywhere in the world -- no matter where they are traveling," Mellow said.

According to a report by online analysis company IDC, the need for remote access IP-based VPNs will grow 75 percent year over year for the next three years. By 2004, ICC analysts say, more than 10 billion users and branch offices will use remote access VPNs, with revenues of more than $2 billion.

GRIC has been signing on ISP and carrier partners for its roaming Internet alliance for a couple years now, and has collected an impressive array of members. Some of the more well-known include AOL Time Warner, Cable & Wireless, France Telecom, Telstra and Nippon Telegraph and Telephone Corporation (NTT).

Alliance members offer their subscribers international access to the local POPs of alliance partners, as monitored, routed and billed by GRIC.

Last week GRIC beefed up its European roaming capabilities by forging an alliance with Nextra, a division of pan-European giant Telenor, putting the alliance's POP count at more than 12,000 in 150 countries.

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PAIX.net Still NAPping, Proud Of It
Palo Alto, Calif.-based , subsidiary of Metromedia Fiber Network, also showed that the trying times ISPs are currently experiencing would not slow its aggressive build-out of Network Access Points (NAPs). The firm said last it would open two new Internet exchanges in Boston and Los Angeles in early third quarter 2001.

PAIX.net is a neutral Internet exchange which utilizes geographically dispersed facilities to provide regional and national carrier-independent data switching, which in turn can lead to faster network performance because packets travel directly between the ISPs rather than using the standard Internet backbone.

PAIX describes itself as neutral because it is the first commercial Internet peering facility not owned by an ISP or telco. The company said it does not get involved in its customers' business arrangements, except to provide connections between participants and between telecommunications providers and participants. While its parent, MFN, is a strong presence in the dark fiber arena, it operates as a separate entity with its own management.

The company's original exchange was built in Palo Alto in 1996. In 2000, the company opened facilities in Vienna, Va.; Seattle; New York City; Dallas and Atlanta.

"We are excited to be opening additional facilities throughout the United States to bring the benefits of neutral peering to more ISPs," said Paul Vixie, president of PAIX.net. "The more peering points we have around the world, the stronger and more efficient the infrastructure of the Internet becomes. By providing a completely neutral marketplace for ISPs and communications providers, we have created the optimum environment for Internet peering to thrive and grow."

Indeed, ISPs are often pleased when PAIX.net sets up shop in their backyards. Microsoft's MSN was happy to see the Seattle facility open.

"The Seattle region is obviously very important to us and we are pleased to have access to a PAIX facility in that area," said Mike Myers, director of Global Networking for MSN.

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CAIS Casts Off Dead Weight
Chief Executive Officer Michael Lee's first action plan to turn failing CAIS Internet into a moneymaker is to completely change in its business plan.

The announcement was made at its conference call reporting the financial results for 2000.

Looking to cut the dead weight residential and hospitality services are having on its financials, the new president and chief executive officer said the company is taking the first steps to reorienting its goals, operations, strategies and relationships.

To do this, CAIS is going into the more lucrative business services arena, providing bundled broadband connectivity to businesses around the country. The carrier plans to keep its 17,000 Web hosting customers.

Lee, formerly the chief business development officer at TelePacific Communications, quickly realized that CAIS had a lot of bandwidth to throw around nationwide but wasn't getting it out to the right customers.

"There are only a few nationwide independent services providers that can boast of a data network of this size and flexibility," Lee said. "As we reassessed the company's business strategy in light of current market conditions, CAIS' status as a tier-one ISP revealed a significant opportunity to expand its customer base and enable the company to achieve positive cash flow."

A Tier 1 provider with OC-3 to OC-12 lines traversing the country from West to East Coast, the carrier was having a very difficult time keeping its state-of-the-art network lit up with data.

The business switch comes with a painful $182.8 million charge, as the carrier is forced to write-down a significant portion of its capital costs and contract rights associated with the hotels and residential service.

Hotels, once the cornerstone of CAIS' now-scrapped business plan, were unable to interest customers to use the bandwidth available. Officials plan to start turning off service to hotels in small cities that can't guarantee a certain level of usage and revenues.

Another anchor in for CAIS was the residential markets it sought to capture with multi-family units like apartments and condominiums. Officials conceded the return on investment was meager, stating that "substantially all" multi-family services would be discontinued.

Now the biggest question remains—can CAIS Internet make the turnaround in time to avoid financial ruin?

Since September, 2000, the company has been making staff reductions from its high of 801 employees to less than half that number. The company has also written IOUs to vendors, promising that its principal payments would be met in 2002 and 2003.

Accountants would or could not say how much the reductions and deferred payments would save the company in 2001, saying only they expected "significant cost savings."

Time is running out for CAIS. With a cash balance of only $68.6 million in late December, 2000, officials refused to say how much was in the coffers currently. They did say the company would need additional capital in the form of investment or debt financing by late second quarter 2001.

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