IDG News Service, Buenos Aires Bureau
BUENOS AIRES –
"There is
good fishing in troubled waters", they say[HDC1], and several
Argentine ISPs (Internet Service Providers) are taking advantage of the low prices they
can get for international connectivity from the local subsidiary of ailing
"supercarrier" PSINet Inc. Several Argentine ISPs -- Abaconet SA, Sion SA and
Netizen SA -- recently signed contracts for submarine cable network capacity with PSINet
(Argentina) SA.
As it is
known, PSINet is on the verge of bankruptcy in the US, and the Nasdaq stock market
delisted the share on April 27, 2001, after the share price dived to US$0.19 on April 3,
after a 52 week high of $60 in March 2000. [See "PSINet de-listed from Nasdaq stock
market", April 23]. The previous week the company had reported a fourth quarter 2000
loss of US$3.2 billion.
Asked why they
had risked a contract with a company in such shaky standing, the ISPs responded that their
reasons were good pricing, and the near certainty that PSINet's operations will continue,
at least in Argentina. Edgardo Jawerbaum [CQ], vice-president of AbacoNet SA, said:
"We see PSINet (Argentina) as very solid. I do not expect that services will be
suspended, and I do not believe that the company is bound to disappear".
Patricio Seoane
[CQ], general manager for PSINet Argentina, remarked that the company invested more than
US$50 million in Argentina, and it has recently opened a 300,000 square foot hosting
center in downtown Buenos Aires. The company has signed for IRU
(Indefeasible Right of Use) underwater fiber cable capacity with Global Crossing for 622M
bps (bits per second) to its US backbone. PSINet has also 155M bps permanent connections
from Buenos Aires to Santiago (Chile) and Río de Janeiro (Brazil), where it has also
opened hosting centers. Seoane went as far to say that at the most the company might be
sold, the shareholders will be other people, but it will continue delivering service.
Seoane
said that the woes of their US parent company reflect strongly on the commercial side of
the Argentine operations, as they have a lot of explaining to do to clients and prospects;
but that the technical operations, including the US end, are fine. "At the extreme we
might change our name", he said. "We are not a volatile company, with no assets,
we have deployed more than 1.6 million kilometers (almost 1 million miles) of fiber optic
in the world. That does have a value, and will go on working."
Luis
Quinelli [CQ], president of Sion SA, one of the ISPs that recently signed for bandwidth,
concurs: "PSINet offers excellent connectivity to the US Tier-1 level, using
bi-directional fiber links. They do have a problem of image here, and we profited from
that, getting lower prices for the service." Quinelli said that his company has
redundant capacity in case something happens to PSINet, but he does not think that
operations will be disrupted.
Argentina
finished the deregulation of its telecommunications market on November 9, 2000. Prior to
that, international data connectivity was exclusively handed by Telintar SA, a joint
venture of the two large incumbent telephone companies in the country: Telefónica de
Argentina SA, a wholly owned subsidiary of Telefónica of Spain, and Telecom Argentina
Stet-France Télécom SA. "Now we can have much higher quality and much lower
prices", Quinelli says.
There is excess
international capacity installed in Argentina for now, he added. That makes for very good
pricing and an excellent connectivity level, said Santiago Luzuriaga, Netizen SA
commercial manager, in a separate interview. Netizen offers paid ISP services and also a
free subscription model through its Uyuyuy.com.ar free ISP operation, that claims to have
100,000 subscribers.
On April 29
PSINet, headquartered at Ashburn, Virginia (near Washington D.C.), announced that his
all-time president and founder, William L. Schrader, was to be replaced as chief executive
and chairman of the board by Ian P. Sharp, a PSINet director since 1996. Sharp said that
his mission would be about damage control. "There is no way [PSINet] can continue to
service its rather large debt. There's got to be some cooperative agreement with the bond
holders", according to a story published by The Washington Post on May 1.
PSINet (USA)
can be contacted at 703-726-4100 or at its Web address: http://www.psinet.com/
. Netizen SA can be reached at +54- 11- 4343-8500 or at http://www.netizen.com.ar . AbacoNet SA is at +54 11
4921-3331 or at http://www.abaconet.com.ar . Sion
SA, also in Buenos Aires, can be contacted at 4706-0045 or at http://www.sion.com
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