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From independent ISP to part of demerged telco Thus, Demon Internet has integrated its ISP and telco arms to provide an overall communication service. Report Greg Brooks
Demon Internet was purchased in May 1998 by Thus (the new name for ScottishTelecom), the telecommunications division of ScottishPower. According to Phil Male, COO at Demon, the deal secured Demon Internet's future as a leading ISP in the UK and also built a platform from which the company could grow.
Male now calls Demon a communication service provider, rather than an ISP. It's an acknowledgement by him that the world of the telco and the ISP have overlapped to Demon's advantage.
"Now I can't say that one bit of the business is the ISP and one part the telco. We're fully integrated with network teams that cross all the boundaries," says Male.
He points to the firm's contract with Sky as an example. Demon runs the broadcaster's entire red button operation on a 24/7 application service provider (ASP) basis, as part of what Male calls the service wrap.
The Internet and telephony sides of the business merge so that it offers both services under one banner, allowing the company to target much bigger deals.
"The conversations that we now have with Sky are about delivering services," says Male. "And our service wrap becomes more important the further you go up the ladder in business."
Traditionally the B2B ISP market operates in one of two ways; either you own your infrastructure or you buy your capacity.
Nicholas Jeffries, VP at PSINet Europe, says that PSINet operates as an Internet supercourier by "buying up lots of capacity from local providers, and then putting it all together into a network that we manage ourselves". Jeffries says this gives the company plenty of spare network capacity, should it be needed.
But Male believes that the deal with Thus, which effectively means that Demon owns its own network in the UK, allows the company to have a more diverse offering and also to be a more stable outfit.
"In the UK you're dealing with a regulated environment which encourages investment in infrastructure that can then be used to provide services," he says. "Having your own infrastructure allows you to sail over some...