Ireland On-Line is usually referred to as the State's largest ISP due to its substantial customer base, particularly in the residential market. IOL started life in Galway in 1992, on a small PC belonging to the current creative and technical director, Mr Barry Flanagan. Moving to Dublin, the company gradually achieved nationwide local-call access using the network owned by PostGem, a subsidiary of An Post.
Amid speculation that PostGem wanted to secure the debt owed to it, it bought IOL in late 1996. Industry sources estimate the purchase price to have been in the region of £2.5 million, which included the near £2 million debt. Since then, it has grown and developed a corporate side, and although IOL's managing director, Mr Colm Grealy, stresses the two companies are still separate, the sources say the edges are "blurred" and that PostGem is keen to merge the two companies.
It is understood the high-profitmargin corporate side of the business generated £2 million in revenues last year, while the residential side generated £4 million to £6 million.
Mr Grealy says IOL and PostGem between them have 140 employees and almost 40,000 dial-up accounts. He also claims around 18,000 company accounts, representing 70 per cent of IOL's account revenues. IOL's rivals' estimates for its dial-up customer base are a bit lower, ranging from "above 30,000" to "around 35,000".
Turning to infrastructure, Mr Grealy says the customer side of IOL has 1,800 modems in 27 points of presence (POPs) countrywide, with £1.6 million being spent on network services this year. Meanwhile, on the Internet side he says there is a total of 7.5 megabits per second bandwidth: 3Mbps to the US and 1.5Mbps to Britain using UUNET, 1Mbps to the London Internet exchange and a 2Mbps satellite downlink for news feeds. A further 6Mbps of bandwidth is planned by the end of the year.
Mr Grealy says the Demon sale in Britain suggests IOL is currently worth about £15 million, based on customer numbers, and says the company is on target to turn a profit this year. He expects second-half trading to be very strong, although the average of about 1,400 new accounts per month will drop over the summer due, he says, to the weather and the World Cup.
The company is expanding its services. It is launching an Internet telephony service at the end of this month, has updated its systems to facilitate an online shopping section linked to its home page, and has a roaming service offering local call access from 38 countries, including Ireland.
IOL's biggest gripe centres on its fellow semi-state rivals Telecom Eireann. Mr Grealy says: "IOL generates £20 million of phone traffic per month", a tidy amount of revenue for Telecom Eireann which owns his two biggest dial-up rivals, Indigo and Tinet. Although acknowledged by the industry to be well ahead of both, he calls for "transparency and a level playing field" in the state-owned telephone company's funding of its ISPs.
ESAT
Ignoring the residential market completely, Esat Net, formerly EUnet Ireland, only offers Internet services to corporate customers. This suits managing director, Mr David Mee since, he says, most ISPs want the corporate end anyway.
He says trying to serve both the residential and corporate markets "dilutes you too much". Home consumers require advertising and marketing, while corporate customers require sales channels. He also says the residential market is limited by the level of PC sales, while the business data market has "no barrier".
Mr Mee says providing corporate Internet access has been the philosophy of the company since it was founded as a campus company in TCD in 1991, making it Ireland's first ISP. In a busy year for ISP buyouts, Internet Services Ireland, commonly known as HomeNet, merged with EUnet Ireland in 1996. More than a year later, last November, Mr Mee's plan of linking up with a telecoms company came to fruition when Esat Telecom bought EUnet Ireland. Earlier this year the residential service offered by HomeNet was dropped.
The link to a telecoms company has many advantages, Mr Mee says, not least the savings on leased infrastructure and better control over service. When Esat bought it, he says, 60 per cent of infrastructure costs went to Telecom Eireann. But now customers are already hooked up to Esat's new fibre loops in Dublin, including Standard Life, Microsoft, Bankers Trust and Oracle.
Esat Net will also get access to the new fibre cable to Britain which is due to go live by the end of this month.
Esat Net claims to have more than doubled its business last year, and Mr Mee says it is "well ahead" of the target of 150 per cent growth for this year. He estimates the company has about 50 per cent of the corporate ISP business based on the number of domain names it is registering for clients, although this does not take into account businesses which do not register their own domain names, which is often the case with other ISPs.
Mr Mee sees big opportunities ahead in the areas of voice and fax over the Internet, and broadband access. "The level of interest in broadband has been phenomenal," he says, and the company is planning to launch voice and fax services over the Internet this year. He also sees growth in the ISDN area.
He refuses to be drawn on Esat Net's bandwidth to the Internet, saying it is upgraded whenever the peak load on international lines reaches 90 per cent. He does say that bandwidth to EUnet in Amsterdam and to MCI in the US has increased fourfold over the last six months or so.
Of his rivals Mr Mee says IOL/PostGem is the biggest competitor, followed by Tinet/Eirtrade and Indigo, which he says is strong at the SME end. He also says he is happy to be competing with semi-state companies, but insists it is not good for the industry. He thinks at some stage it makes sense to have only one state ISP, and contends the lack of state planning is due to the fast growth of this relatively new industry.
Club Internet
Describing his firm as "the last private company who's an ISP", the managing director of Dublin-based Club Internet is ignoring smaller companies and looking at what he says are his three competitors: An Post, Telecom Eireann and Esat. But Mr Tom Kelly is reluctant to give too much away about Club Internet because, "various different entities" have expressed an interest in buying into the company.
Club Internet, which offers dialup and cheap ISDN access in Dublin only, claims 5,000 to 6,000 residential customers, although his rivals put the figure at about half this. He says the corporate side of the company, trading under the MediaNet banner, has more than 1,000 customers, including TSB, Ulster Bank, National Irish Bank and US Robotics.
The company was founded in 1995 by Mr Kelly and Mr Stuart Fogarty. Dublin radio station FM104 bought a 33 per cent stake in 1996, and late last year increased its stake to nearly 50 per cent.
International access is provided through a deal with Global One, which is owned by France Telecom, Deutsche Telekom and Sprint, and which has a POP in Dublin. The current international bandwidth is about 2Mbps according to Mr Kelly, who says Club Internet's leased-line customers are directly connected to Global One's core network. "Unlike other ISPs," he says, "our leased-line customers don't share with dial-up or ISDN customers."
Explaining Club Internet's low profile, especially given its low prices for Dublin access, Mr Kelly says that without the resources of semi-state and PLC companies it relies on "word of mouth" for what he calls "organic growth".
Eoin Licken is at elicken@irish- times.ie
