Jan 17, 2003 : The webhost industry: week review

📅 January 17, 2003 - The Web hosting industry saw ups and downs across the board this week, with some companies launching while others folded, operations bought and sold and offers rejected, as well as certain legal actions moving forward while others stumbled coming out of the gate.
On Monday, representatives for Web hosting industry publication Hosting Tech magazine confirmed rumors that management had made a decision to end production on the magazine. After roughly two years of publication, the declining fortunes of the business in general caused advertising revenues at the magazine to dwindle. Hosting Tech was the hosting business's last remaining major print publication.
On Tuesday, discount dedicated hosting company ServerBeach announced that it had launched its operation, offering a low-priced dedicated server package designed to provide an affordable alternative for technology hobbyists. Launched by Rackspace Managed Hosting founder Richard Yoo, the company says it will offer its Personal Server package, built on quality network and hardware, starting at a monthly rate of $99.
Along with the opening and closing of organizations, this week saw plenty of news related to the buying and selling, and reorganizing, of existing operations.
Reports released on Monday said that Web hosting operator Interland Inc. plans to close the Kansas City-based facilities of CommuniTech.Net, which it acquired in the early part of 2002, incorporating the company's operations into its other data centers in Atlanta, Miami and Los Angeles. Employees at the 60-person office were notified this week that the operation will be completely closed at the end of 60 days. Some of the employees will reportedly be offered positions in Atlanta next week.
Later in the week, Interland said that it had closed its acquisition of Web site software developer Trellix, paying a total of $12.2 million in cash, stocks and warrants. In its quarterly report filed this week, Interland said the cost of the acquisition included $4.75 million in cash, 3 million shares of Interland common stock, and 6 million warrants to buy shares at a cost of $5 per share.
Also on Monday, reports indicated that communications carrier Broadwing Inc. is considering the sale of its high-speed communications business as part of a larger restructuring effort, and will take a charge of $2 billion. The company also said it had secured financing of $300 million, which it will use to pay down bank debt. Broadwing says it is considering inquiries it has received regarding the high-speed unit, the company's largest revenue-generator during the nine months ending Sept. 30, 2002.
On Thursday, domain name registrar Register.com said that its board of directors had rejected an unsolicited offer to acquire the company, saying the bid of $4.95 per share is inadequate. RCM Acquisition Co., which already holds a 4.2 percent stake in the company, said on Wednesday that it had presented Register.com's board with a proposal to acquire the outstanding shares of the company at $4.95 cash per share, valuing Register.com at approximately $230 million.
And, along with buying and selling, several organizations took other steps to get what they wanted this week, engaging in legal actions of varying severity, and varying success.
Reports released Tuesday said that US-based copyright solutions firm MediaForce had sent letters to at least one US ISP, on behalf of media company Warner Brothers, identifying IP addresses it claims have been involved in distributing copyrighted material, and requesting that the addresses' users be denied access and that their accounts be terminated. Australian ISPs said they would be unlikely to comply with the requests, unless contacted by Australian government or police, out of concern for acting improperly. To press the matter, say experts, MediaForce will have to go through international regulatory channels, as Australian courts do not enforce US law.
And on Thursday, adult Internet portal Sex.Com said it had seen some positive results in its lawsuit against Network Solutions Inc., now a part of VeriSign. Sex.Com founder and CEO Gary Kremen is trying to hold the registrar accountable for transferring ownership of the Sex.Com domain after receiving a forged letter from Stephen Cohen. Asked to determine whether a domain name is property that can be converted, the Appeals Court hearing the case asked that the California Supreme Court intervene, adding that it felt the domain name could reasonably be considered property.
The overall theme of this week's Web hosting industry news seemed to be balance. The launch of an interesting new hosting product coincided with the disappearance of a well-liked publication. Interland's acquisition announcements came as Broadwing began to consider selling its communications business. And Warner Brothers' preliminary legal action faltered as Sex.Com's suit saw promising results against VeriSign. While balance isn't always something to strive for, it is certainly better than at least one of the alternatives.