PSINet's departure
 
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Anyone else feeling a little sad about the imminent demise of PSINet?
PSINet was the last remaining national ISP that offered business IP services and was not owned by a larger telecommunications company. Although PSINet is still in business - and its customers are waiting to see what will happen - most believe the ISP is writing its final chapters.
(For more on the customers' quandary, see: www.nwfusion.com/archive/2001/118850_03-26-2001.html)
While my role as a journalist is to remain as impartial as possible, I have to admit that I was rooting for PSINet. Not because I believed that the ISP's services were the best around or because I thought the management team was unmatched in the industry, but because it was the underdog.
When the ISP buying spree began, PSINet remained independent and seemed to still be able to compete. AOL started the buying spree with its purchase of Advanced Network & Services (ANS) for $35 million in December 1994.
MFS Communications later acquired UUNET for $2 billion in May 1996. About a year later, GTE acquired BBN Planet in May 1997 for $616 million.
In September of the same year, WorldCom struck an involved three-way deal with AOL and H&R Block to acquire ANS and CompuServe respectively. The deal was worth $1.2 billion. This was after WorldCom bought MFS for $14 billion in December 1996, soon after MFS's acquisition of UUNET was final.
More recently, XO Communications (formerly Nextlink Communications) acquired Concentric for $2.9 billion.
Rumors swirled at times saying PSINet was a target for acquisition. But CEO William Schrader is rumored to have said no offer was high enough.
Meanwhile, PSINet seemed to be competing, however it was not bringing in the same service revenue as competitors and was hit hard when the market started to take a turn last year.
The company has since been delisted from the NASDAQ stock exchange, has sold off several assets and is believed to be headed for bankruptcy protection.
My hope was that an underdog - one not owned by one of the largest telecommunications service providers - could succeed. But clearly the costs of operating a national and international ISP are too high. Or they were just too high for PSINet.
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Denise Pappalardo is a senior editor for Network World, covering ISPs, VPNs and related topics. Reach her at denisep@nww.com.
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