Access only internet companies are rapidly being supplanted by business focused providers placing the emphasis on robust web services for next generation e-commerce.

Internet service providers - even those offering fast internet options and static web design - just don’t cut it for the modern day business preparing to get serious with on-line operations.

In fact the term ISP is being redefined as on-line services companies become IT and communications specialists offering secure voice and data links, bureau style web hosting, consulting and e-commerce skills. Where they don’t have the hardware, software, talent or design skills they’re partnering with those who do. Innovation and diversification are now they keys to survival.

Many smaller players are unable to survive narrowing margins and stiff competition from the telcos, computer companies, systems integrators and specialist firms who are re-inventing themselves as ISPs.  Smaller ISPs who’ve got anything serious to offer in terms of skills or applications are rapidly being acquired.

Xtra, TelstraClear and Ihug continue to own about 80 per cent of the internet market, which now comprises about 1.8 million users, being serviced by less than 80 internet service providers around the country.

In the past year alone there have been major changes with Voyager closing down, Asia Online / Iconz being picked up by Spencer family-owned Desden Equities and Compass Communications expanding at an astounding rate having acquired nationwide wireless internet provider Radionet from the troubled Wilson Neil group. It plans to integrate the Radionet brand for its own high-speed wireless network service as Compass Radionet. TVNZ-owned BCL is also revealing itself as a major force in internet provision to remote areas.

Orcon Internet is one of several players which has been growing by acquisition, another is Maxnet, which has become one of the nation’s most entrepreneurial web companies since it first launched a few years back as a backyard operation in Warkworth.

A year ago Maxnet acquired Surfer, then Titan and most recently Web Internet (Win). While it began with a couple of hundred dial up domestic subscribers it has rapidly grown to offer the full range of connectivity options including ADSL, frame relay and wireless. It claims to be one of the biggest resellers of wireless in the country and has moved quickly into the development space.

“You need diversification to survive. We’re now pretty strong in hosting and co-location and it’s likely voice – both traditional and voice over IP and mobile services - will play a bigger part in our operation in the future,” says Maxnet managing director Antony Urbahn.

Maxnet has high hopes for the success of trials it is conducting with one of one of its customers involving streaming multimedia broadcasts of Prime Minister Helen Clark’s speeches to mobile devices.

The broadcasts, mainly being received on PDAs are the first in a series of 18 Maxnet has committed to carry. “It’s a closed experiment at this stage but it’s been snapped up by Vodaphone and our partner’s technology has been rolled out worldwide. Previously it wasn’t thought you could do this until 3G mobile services were available but we’re using 2.5G services,” says Mr Urbahn.

Maxnet is also branching out having formed a separate company Cybersystems Software to offer customer relations management (CRM), billing and call center management software of the caliber only previously available at enterprise level.

The software was developed in-house by a former US military programmer. “It’s still at the infancy but already most of our customers are using parts of it – two thirds of what we do is hidden behind the secure section of our web site,” he says.

While Maxnet continues to grow its domestic internet access base much of its development is going into servicing the business community. Mr Urbahn say the company now has turnover of “a few million” and is profitable.

Software development company Olympic Software recently created Digital Exchange to take over some of its ISP functions. The new company will develop, install and host complex e-commerce sites including credit card validation, back office applications and integration.

Digital Exchange has a million dollar investment in a fully redundant and secure Compaq-based infrastructure, for dedicated web hosting and co-location. It provides e-commerce and back-end office applications, typically using Microsoft products such as BizTalk and Great Plains, although parent company Olympic will do any installation, development and customising that might be required.

It has five people involved in full time support needs and prides itself in providing an end-to-end service, including application hosting (ASP) of Microsoft Exchange Mail and other applications. It has recently launched WebCat a new offering to get customers on-line rapidly with web sites and catalogues.  What capabilities it doesn’t have in-house it’ll contract to other partners or defer to its parent Olympic Software.

“We’re the technical subscriber service involved in hosting and remote management of equipment for fully hosted business solutions. We can operate in the ISP space, including domain name hosting, providing customers with access to the internet and meeting their full communications needs,” says Digital Exchange manager Mike Duke.

He believes there’s a consolidation happening in the market largely because companies are getting serious about their on-line presence and have a greater need for security and redundancy. “There were a huge number of companies involved in web development and related activities which came from marketing and design backgrounds and ran customer machines on their sites. Now there’s a move away from static sites to active e-commerce which needs to be operating 24 hours a day seven days a week. Business is affected if the site’s not available,” says Mr Duke.

He says the level of complexity has increased in terms of physical hardware, communications and applications. “There’s not too many small to medium companies that can sustain the sort of resources required to support this,” he says.

ZeroOne (formerly Wellington-based web development company E-Solutions) says it’s done everything backwards. “Most of our competitors started as dial up ISPs or in web design and moved into development. We started at the other end of the picture in e-commerce application development,” says managing director Bruce Trevarthen (pictured).

ZeroOne’s specialist web development capabilities are increasingly based around Cold Fusion and Java. “The hosting came about because a lot of clients wanted a complete solution and for us to help manage their business and keep ahead of technology,” he says.

“The perception of value still lies with how things look but the majority of the work from our perspective is at the back making the site work, making it easier for customers to do business with you,” says Mr Trevarthen.

“You either have to make things more efficient or create a new revenue stream which comes down to automating systems or streamlining processes. Too much emphasis is placed on looks,” he says. ZeroOne has now outsourced the design aspects of its work to a partner so it can focus on its core skills. 

The future for ZeroOne has a lot to do with active, functional web sites and the use of Flash MX and Cold Fusion MX - Java-based development packages which are interface orientated. “We’ve got to stop thinking about web sites for people to browse, we’ve got to build for people to do things. With Flash and Flash scripting you download the active elements of a web page and it makes calls across the internet to get services and populate the screen without the need to refresh or re-load new pages.  Applications are really coming to life now,” says Mr Trevarthen.

ZeroOne’s strengths lie in e-commerce and mobile internet application development and hosting for a lot of high profile clients. Co-location or tele-housing where it purchases and manages equipment on behalf of customers is also a growth area.

“Having your own server means the resources, the hard drive space, RAM, CPU performance and capacity, are for your site alone,” says Mr Trevarthen. That means ZeroOne also takes care of security, back-up, redundancy and disaster recovery. “If you want the server back you can simply pick it up and take it back in-house. That’s the nature of our platform.”

While based in Wellington with a strong focus on government and large corporates, ZeroOne also develops and hosts wineries in Hawkes Bay and e-commerce clients in Wellington including Beauty Direct and Smoke CDs.

Iprolink formed in Auckland by Napier Computer Systems in 1995 was one of New Zealand’s pioneering ISPs but quickly shifted away from dial-up provision when it became clear the market was getting crowded.

It began focusing on business-to-business communications, establishing itself as a broker, consulting with clients to determine their needs and then bringing together the components and partners for an end-to-end solution.

The company prides itself on being able to think outside the square. Iprolink not only brokers networks and works in closely with technology and solutions providers and has a co-hosting center where clients can locate their servers.

In increasing demand is document management and web site content management which can save customers from having to go back to their web designers to change every spelling mistake or detail on their internet, intranet or extranet. “It gives the power back to the client to look after their own copy,” says Sam Excell, sales account manager with Iprolink.

New Plymouth-based WebFarm became so frustrated that New Zealand didn’t have a multi-currency payment gateway for e-commerce clients it branched out from its web hosting niche to provide such a service. That opened the way for e-commerce sites to trade in currencies other than New Zealand dollars through a partnership with British-based WorldPay in 1999.

Transactions are authorised in real time – checking the cards are valid and not stolen - then funds are taken off that card and put in the merchants WorldPay account. Settlements are made to merchant’s bank accounts weekly. WebFarm says WorldPay offers a secure on-line package with a complete back-end so they customers can track transactions, issue refunds and check when they’re going to be paid.

“With WorldPay a merchant can price and transact their goods in any currency they like and the exact amount will be billed to the customer’s card,” says WebFarm director Richard Shearer (pictured above).

For more information on theses companies, visit the Site Hosts / Business ISPs section

By Keith Newman

July 2002

Snapshot of leading business ISPs services diversification: