Traditionally an Internet service provider was the company that provided you with access to the Internet and may have provided a few ancillary services such as web design, a hosted e-commerce capability and e-mail management. Really those companies should have been called Internet access providers, but for whatever reason that term never really took off.
Now there are literally hundreds of companies providing Internet services such as hosting, security, e-mail filtering and application management to the Irish market, but only a handful would consider themselves Internet service providers in the classic sense of the word. At its most basic, the market can be divided into classic ISPs – normally spin offs from telcos – which provide connectivity and the full range of design, hosting, e-mail and security services. In the last few years specialist providers based around hosting have emerged. In particular, a commercially aggressive group of independent companies have begun to offer hosting and related services at a very low cost.
‘You have to be very careful with the terminology,’ says Michele Neylon of Carlow-based Blacknight Solutions. ‘ISPs and hosting companies are two separate things. Companies like Eircom, EsatBT and NetSource provide the connectivity, while we deal with everything else.’
Blacknight is just one of the independent companies that has sprung up in the last couple of years, undercutting the big players on price. With comparatively small staff numbers, it is able to offer a low cost service by buying up the abundant data centre space available in Ireland. With high profile failures of large data centres such as Worldport, Wolfe, Inflo and Metromedia Fibre Networks, getting a deal on rack space is not a problem. The data centres are keen to fill their expensive facilities, but the bitter pill is that the customers they are selling to are in turn undercutting them when they sell into the corporate market.
‘We are infrastructure free because we’ve availed of the abundance of data centre and IP space to offer savings to our customers,’ says Stephen McCarron, managing director of Hosting 365. ‘We work with existing telcos such as NTL and Eircom for fixed lines and connections. Every acquisition for them has to be economically sensible and causes them all the pain.’ The strategy appears to be working – the company now hosts almost 8,000 websites and claims to be the largest Irish hosting company, second only to Eircom.
Ron McNamara, business development manager for EsatBT Application Hosting, says that even for the telcos the days of merely selling connectivity are long gone. ‘Connectivity on its own is not enough any more,’ says McNamara. ‘No-one gets it on its own – at a minimum they will have a firewall as well and then move up to things like intrusion detection.’
Soup to nuts
With so many players in the market it may seem to make financial sense to shop around for the different elements you need for your Internet infrastructure to create your own bundle of services. That’s certainly the argument that the indies would make, but the big players say it’s not just a matter of cost. Not surprisingly, the telco-backed ISPs who offer a soup to nuts service, prefer to do it all for their customers.
‘Support is a big issue if you have multiple providers,’ says Fintan Lawler, director of ISP, Hosting and Managed Services with Eircom Net. ‘If you have different providers for hosting, connectivity, design and security, it takes time to mesh them all together. With Eircom it’s developed, implemented and supported by someone who knows the end to end solution.’
‘There are a lot of hidden costs with multiple providers,’ says McNamara of EsatBT. ‘It’s time consuming to manage a number of providers. And with EsatBT, the more services you get from us, the more the discount we will give you.’
However, Richard Tarr of Host Ireland suggests that paying a premium for a one-stop-shop is a luxury that most businesses can ill-afford. ‘The economy is tighter now, so money is not being thrown around like it was a few years ago,’ says Tarr. ‘People are looking around and comparing price. The telcos can offer an all-in-one package, but customers can pay a fairly hefty premium for that.’
He points to Host Ireland’s Unix Budget hosting package which provides 250Mbyte of storage, 50 POP 3 e-mail addresses, anti-virus protection and 2,000Mbyte of transfers a month which costs EUR129.95 per annum with free telephone support. Despite the low cost, Tarr is keen not to be seen as running a bucket shop. ‘Businesses are fortunate that hosting is being perceived as a commodity with a price,’ he says. ‘But after they have received bad service, the customer sees it as a service and is less price sensitive.’
Host Ireland is unique amongst its peers in that its servers are not located in Ireland, but in Rackspace’s data centre in Texas. Tarr says the decision to host in the US is based on cost, price and service. ‘We can’t get the bandwidth and connectivity here for the price we get it in America,’ he says. ‘The Internet is an international thing and the US is the backbone. We have better connectivity there to a selection of backbone providers, many of whom don’t even come into Ireland.’ Tarr is so confident of the service he has been receiving from Rackspace that he is considering increasing his service level agreements with customers from 99 per cent to 100 per cent.
Even the big boys have been slashing their prices in recent times. Fintan Lawler estimates that hosting is now 30-60 per cent cheaper now than it was three years ago, primarily due to the fact that wage inflation has been driven out of the IT sector. However he cautions against comparing services purely on price. ‘It’s not apples and apples in terms of environment and solution,’ says Lawler.
Class A
Both Eircom and Esat BT maintain that the services they offer is of a much higher quality than that offered by the independents. They operate fully resilient Class A data centres with no single point of failure, which is why they feel justified charging a premium for their services.
Falling prices are not the only good news for customers. The range and complexity of services being offered has also expanded in the last few years. Many additional services are now being bundled for free in an effort to woo business.
Neylon points out that Blacknight offers server-side mail filtering for free on all its Linux hosting packages. The company also supports Java and servlets in its shared hosting environment – something that Neylon claims few of its competitors provide. ‘We’re throwing in features that were considered high end 12 to 24 months ago,’ he says.
Managed services are also moving out of the high-end realm and becoming an option for businesses of all sizes. Eircom Net now offers a single managed server product that is tailored for SMEs. Customers choose from one of two standard hardware packages with features including dual power supplies, battery backed write cache, RAID storage systems, dual NICs for resilient Internet connectivity and data back-ups. Eircom Net installs the OS and sets up the server in a shared rack at its data centre. The OS is managed from Eircom’s Centralised Enterprise Management System as well as monitoring any hardware related faults and replacing faulty parts if required. The server is connected to Eircom Net’s backbone at 128Kbps or higher on a flat rate or usage basis. Dublin-based mobile software developer, Saadian Technologies is one of the first companies to sign up for the service.
Hosting 365 is also seeking to differentiate itself by offering a dedicated managed hosting service. ‘We host the application and source the hardware and connection,’ explains McCarron. ‘We pull together the products from the data centres and carriers and provide it to the end user with an SLA as a monthly service. There’s zero capital expenditure for the customer with fixed monthly costs.’ He cites the example of a Microsoft SQL Server powering a .Net application. The capital expenditure required to buy servers, a firewall, switches, renting a cabinet, sourcing connectivity and buying the necessary licences could easily reach EUR25,000. Hosting 365 offers it as a service to clients for under EUR1,000 a month.
Rolls Royce
While a dedicated managed service is the Rolls Royce of hosting, it may be overkill for many businesses. Michele Neylon points out that the choice between a managed services, co-location or hosting in a shared environment depends on what the client wants to do. He points to the Diocese of Cork and Ross, one of his clients which operates a very large and complex website, but one which is hosted in a shared environment.
There’s also been a trend recently to move all sorts of applications into data centres – not just the traditional web and transaction servers which companies have felt comfortable housing off-site for a number of years. McCarron sees more clients outsourcing their office comms room so that Hosting 365 becomes a fibre extension of their office and manages core services such as file and print as well as web infrastructure. All the service providers have seen an increase in this kind of business due to the current tighter economic environment.
Interxion hosts the billing system of a large financial services company in its Dublin data centre as part of a multi-million euro deal. Running on IBM hardware, the system bills annual revenues of over EUR400m and supports subsidiaries in 22 countries. ‘Deals like that mean we are much more embedded with our customers,’ says Jason O’Conaill, sales manager with Interxion Ireland. ‘They don’t see us as just a rack and stack company – they are entrusting the heart of their business to us.’
Interxion is also seeing an increase in customers using the data centre for hosting SAN and ERP applications, which is one of the reasons it has started to offer additional services such as its Secure Data Services for backup and restores. Unlike enterprise offerings such as Veritas and Tiscali, it uses agentless technology that can back up from a central client on the network. The Irish Stock Exchange is one of the organisations that has outsourced the bulk of its infrastructure to Interxion, including its workflow and imaging systems as well as its Internet servers. ‘The date centre model was built in Ireland on an online platform as opposed to a core of HP and IBM kit,’ says O’Conaill, but he believes the market is moving that way now.
Interxion was established in the late nineties as a European carrier hotel for telcos and ISPs, but financial realities meant that it now sells into enterprises as well. ‘We are into the co-location and data centre business,’ says O’Connaill. ‘We look after infrastructure by the cabinet and rack.’ The company has 42 customers in its Dublin centre, many of whom are reselling the space and managing it on behalf of their own end customers. The advantages of being located in the same data centre as so many carriers and telcos is that customers can avail of multiple redundant Internet connections. Telecoms companies resident in Interxion with POPs include Tiscali, Colt Telecom, NTL, EsatBT, Eircom, Irish Broadband, Packet Exchange (Level3), Cable and Wireless, AT&T and Smart Telecom.
Multi-homed
While Eircom and EsatBT may have the funding and infrastructure to offer redundant networks, the independent players are offering increasingly sophisticated infrastructure by going to a number of data centres. Hosting 365, for example, rents space from Data Electronics, Interxion and Net Source and has its own network between the three data centres so that customers can have a highly resilient service if required. A large proportion of the indies host with Data Electronics which itself is a multi-homed data centre with multiple ISPs and carriers providing connectivity. It is also home to HEA Net and INEX which, according to the independent hosters, means the connection from their clients is much faster even if they are not directly peering.
All in all, it seems that the Internet services space is a buyers market at the moment. While managing mutliple service providers may not make sense for organisations with a small IT department, the availability of numerous alternative suppliers provides a bargaining chip when it comes to negotiating price. The range of services offered by the various players means that core IT functions can increasingly be moved off-site to avail of the economies of scale of a data centre. Businesses who are not already doing so would be well advised to re-asses their spend on IT and Internet infrastructure and ask themselves are they paying too much.
24/11/03
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