UUnet - First Commercial Isp

FIRST COMMERCIAL ISP

Founded in 1987, UUNET is recognized as the first commercial Internet service provider (ISP). In the early 1990s it introduced several innovative services, including the first commercial application-layer firewall services for IP networks in 1992, T-1 connections to the Internet in 1993, the first virtual private network (VPN) service and Web hosting services in 1994. In 1994 John Sidgmore became UUNET's CEO and president. He was formerly president and CEO of CSC Intelicom.

When Microsoft Corp. began preparing its Microsoft Network (MSN) to coincide with the release of Windows 95, UUNET provided the Internet backbone that would allow MSN users to have dial-up access to both MSN and the Internet. At the time UUNET had 25 points of presence and was building out its network. Microsoft also took a minority interest in UUNET, with the funds going toward UUNET's build-out. Microsoft also took a seat on UUNET's board of directors.

UUNET completed its initial public offering (IPO) in May 1995, offering shares at $14 and raising more than $50 million. By July UUNET's stock was trading in the $45 range. Although UUNET had not shown a profit, investors were betting on its potential for explosive revenue growth in the coming year. At the time of UUNET's IPO, Microsoft owned about 15 percent of the company. UUNET's revenue for 1995 was $94 million, compared to $12.4 million in the previous year, making it the leading ISP in the industry.

From the beginning UUNET was focused on the corporate market, which was expected to grow sooner and more quickly than the consumer market for Internet access. The corporate market gave UUNET higher revenue streams, bigger margins, and a more reliable customer base. UUNET also offered premium services, such as network management and security, for which it could charge more. UUNET's corporate clients included America Online and AT&T as well as Microsoft. UUNET's two principal services were leased-line connections for businesses under its Alter-Net program and dial-up access through its AlterDial program. AlterDial was expected to have 130 points of presence by the end of 1995. In 1996 UUNET began offering more services related to electronic commerce, inlcuding end-to-end security, FTP (File Transport Protocol) hosting, and dedicated servers that companies could lease.