As Others 'Surf' Net, BBN Corp. Builds It

Internet pioneer is among 'backbone' service firms

BBN Corp. does not make a lot of newspaper headlines. Yet behind the scenes, it is playing a strategic role in building the fast-growing Internet, the global computer network that has captivated the media and corporate America.

If most people experience the Net as a string of ethereal World Wide Web sites that can be visited electronically at the click of a mouse, BBN sees the view from within the fiber-optic pipeline.

This Cambridge, Mass., company helped build the original forerunner of the Internet 25 years ago. Now it is one of a select group of "backbone" Internet service providers (ISPs), with direct connections to the Net's US access points. Its clients are not individuals but large companies such as Bank of America, Intel Corp., and smaller ISPs, which put individual users on the Net.

A big question now, with the Net's rapid growth, is whether companies such as BBN can keep up. BBN maintains that they can.

"A new Web site is added to the Internet every 10 minutes of each working day," says Cliff Conneighton, BBN's vice president of marketing.

That growth in demand means that the backbone ISPs must expand the Net's physical structure.

BBN, through its BBN Planet division, is going into the red to do just that. BBN officials believe, however, that the spending will pay off handsomely down the line.

BBN's revenues for the third quarter ending March 31were $71.3 million, up 37 percent from a year ago. Its operating loss of $30.2 million included a reorganization charge of $20.7 million.

Reason for red ink

But top BBN officials say, in effect, just wait. They are expanding to handle what they see as continuing explosive growth in the use of the Internet for commercial purposes - everything from retail selling to banking to data exchange.

"BBN's market potential is massive," says Ted Julian, a professional Internet watcher at International Data Corp., a market-research firm in Framingham, Mass. "The big players don't have to fight each other for business now, so I'd be concerned if they were not making huge investments."

BBN makes its money by connecting organizations to the Internet, supplying security features, consulting on electronic-commerce methods, and providing 24-hour monitoring and maintenance services on firms' Internet connections. Its R&D facilities, built up by years of government contracting, are being used to develop Internet commercialization technologies.

Unlike smaller ISPs that serve individual Net users, BBN operates trunk telephone lines that connect major regions of the US; and it owns major regional computer networks that store and send data for its clients. Other backbone ISPs include IBM Global Network, MCI, Sprint, UUNET Technologies, and PSINet.

One of BBN's biggest challenges, Mr. Conneighton says, is "a shortage of network engineers to do installations."

BBN can make the unique claim of being the first Internet company.

It was hired by the US government 25 years ago to build ARPANET, a computer-phone line loop connecting government agencies and research universities doing defense contract work. Funding came from the Pentagon's Advanced Research Projects Agency. BBN still provides major services to government agencies - setting up Internet communications systems for the Defense Department's involvement in Bosnia, for example.

Now, with the US government having given up its control of the Internet a year and a half ago, BBN finds itself on the ground floor of a dramatic information and commercial revolution.

AT&T partnership

The company made a strategic alliance with AT&T Corp. last June to jointly provide Internet access and related services to businesses.

Any business that goes to AT&T for a hookup is actually put on the Net by BBN, while AT&T's massive worldwide cable system is now more accessible to BBN.

Although no backbone ISP has it all, a January report by Forrester Research Inc. of Cambridge, Mass., concludes that BBN/AT&T provides the "best security, soup-to-nuts management, and leading ideas for private and guaranteed real-time Internets." IBM Global Network comes in second in this study, and Sprint and MCI are judged to be major players. The study also says that "pure Internet providers like PSINet, UUNET, and Netcom are drowning in red ink ... and will be bought by the big carriers."

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