Digex to enter European Internet market via Rockville Orion Network to resell services

Internet services

September 18, 1996|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

Digex Inc. will expand into the European Internet market for the first time under a deal to sell Internet services to a Rockville satellite services company, which will resell them to its own customers in Europe.

The deal will let a unit of Orion Network Systems Inc. offer its customers more telecommunications capabilities, and gives Beltsville-based Digex its fourth big deal to sell Internet-access service under another company's name, a tactic it has embraced in order to diversify from its core business of selling Internet access to corporate end-users.

All of the private-label Internet wholesaling deals have been reached since March, said Nick Magliato, general manager of Digex's private networks group. Orion's new Internet service will be offered mostly in Western and Northern Europe.

Magliato said Digex approached Orion with the deal, believing that much of Europe's Internet is so choked by antiquated telephone systems that it's more efficient to beam transmissions via Orion's satellites to Digex's Internet-connection network in the United States than to rely on land-based European systems.

"Eighty percent of the content on the Internet is in the U.S.," Magliato said, so most of the calls would be coming across the ocean anyway. "This is just as good, if not better, than [using] fiber [optic]" land-based phone lines to connect users to the Internet.

Joe O'Neill, Orion's director of Internet Services, said the capacity problems of the European portion of the Net cause long delays and lost data. And he said the company has available satellite capacity already, so it can expand its offerings through the deal at very little cost.

"Almost anything is pure profit," O'Neill said. He said the company has about a dozen clients lined up to buy the connection service, some of them also wholesalers who will sell the service yet again. The company expects to get attract more corporate end-users as customers after yesterday's announcement, he said.

The companies did not disclose terms of the multiyear deal.

Orion also plans to launch two additional satellites during 1999, which will extend Orion's marketing reach under the agreement to South America, the Middle East and the major population centers in the Asia-Pacific region.

Pub Date: 9/18/96

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