Budget ISP eyes Aussie market

By ADAM GIFFORD

Esurf Wireless, the company which runs the low-cost internet service provider (ISP) Ezysurf, is branching out to an ASP (application service provider) as it attempts to find ways to make the internet pay.

It also plans to open an ISP in Australia next month, using bandwidth from Telstra.

Chief executive Michael Spencer said that although part of the motivation was corporate demand for a transtasman ISP, he also believed the market offered a good opportunity.

"We have a costing model which is better for residential users than anyone has there now," said Mr Spencer.

"We can offer good quality, good price and still get a good gross margin."

He said Ezysurf had slowed at about 300 business and 3000 residential customers, but had been picking up more customers in recent weeks with the demise of various free internet plans.

At $15 a month or $120 a year prepaid, Ezysurf now had one of the the cheapest internet plans on the market.

Mr Spencer said the company recognised that selling dial-up access to the internet was notthe way to make money long-term, and it had invested in infrastructure so it could offer applications online.

"We've spent $60,000 on backup power generators, so if we have another power crisis we can run for at least four weeks."

The company is already running a stock management system, Pronto, for Honda Motorcycles, and is looking to sell the application to other firms.

It is entering into partnership with local software companies to provide infrastructure to allow them to rent their software over the internet.

Mr Spencer has also struck a deal with a United States-based ASP to on-sell a range of consumer and small business applications, such as diaries, diet planners, contact managers and accounting packages.

Prices are likely to range from $5 to $20 a month.

"We're gauging where the market is," he said. "For single-user applications, instead of people buying a whole application it's more cost effective to rent it .

"For business applications, a small to medium enterprise might be prepared to pay $99 a month for a full suite. They can expense that.

"We're finding with a lot of customers, when they come to upgrade their ERP system, when they look at the refinancing and hardware replacement costs, they are looking at renting the hardware and software solutions, so it is not in their capital expenditure."

Competing ASPs in the market, such as the Telecom-EDS-Microsoft consortium eSolutions, were carrying infrastructure costs that were too high for most customers.

"We run on a Linux platform, not big Sun boxes, so when we get to market we can run an ASP solution which makes sense for New Zealand business."

He said the company would offer only browser-based applications, not ones which required Citrix technology to carry the applications across the network.