U S West to offer remote backup: Deal marks first major ISP application for Connected

U S West.net will announce this week a new service that lets Internet users remotely and automatically back up their hard drives at regular intervals.

The E-Backup service, which will be provided through an agreement with Connected Corp., is aimed at telecommuters, work-at-home professionals and mobile users.

"We find our customers don't do a very good job of managing their storage capabilities," said Steve Archuleta, executive director of new product development for U S West.net. "That's why we went out and looked at something that was automatic."

Using E-Backup, data from a subscriber's hard drive is encrypted and stored on servers maintained by Connected. In the event of a software problem, system malfunction or hardware loss, users can retrieve data from any compatible computer with Internet access.At the heart of the client side is softwar e that detects changes in file sizes and then compresses, encrypts and stores the files on a remote server. U S West.net subscribers, who will pay an additional $19.95 a month, may omit sensitive files they don't want backed up.

"The technology was designed to be optimized for a 28.8 [kb/s] connection," said Mike Grandinetti, vice president of marketing for Connected. "The technology really is bandwidth reduction."

Under terms of the three-year deal, U S West will market and sell the service while Connected will act as an outsourcer and provide back office support.

"With all these high-speed services, our customers need more security," said Archuleta. "We looked at building it ourselves but realized we don't have to be all things for all people."

U S West expects to market the service to its Megabit asymmetrical digital subscriber line subscribers. However, in its initial deployment, it likely will be most appealing to telecommuters because of their increasing data storage needs, said Grandinetti.

For Connected, the deal is one of the first with a major Internet service provider.

"Connected needed to find a company with the market clout to get their concept to take off," said Natalie Robb, a consultant with TeleChoice. "The real intent is to target it toward enterprises."

Just minutes after MCI received the go-ahead on its WorldCom merger from the Department of Justice, the interexchange carrier announced that it will sell its entire Internet business to Cable & Wireless for $1.75 billion.

To appease federal and European regulators, MCI said in May that it would sell its Internet backbone to C&W for $625 million. Earlier this month, the European Commission approved the MCI/WorldCom merger on the condition that MCI sell off more of its Internet business. This, combined with other regulatory concerns, made it necessary to divest the operations for the merger to go through, said an MCI spokesman. "The strategic benefits of selling the businesses outweighed continuing the debate over Internet dominance," he said.

In the previous announcement, MCI said it would sell its nationwide Internet backbone as well as 1300 Internet service provider customers to C&W. Last week's deal adds 3300 dedicated access customers, MCI's dial-up business-which provides Internet access to 250,000 consumers and 60,000 business customers-and its Web hosting and managed firewall services. The entire business is expected to earn $375 million in revenue this year.

The sale is a big sacrifice for MCI, and it will initially have significant effects on its market share, said TeleChoice analyst Tom Jenkins, who was surprised by the size of the divestiture.

Jeffrey Kagan, an analyst based in Atlanta, agreed that it's a momentary setback for MCI but that the carrier will be able to rebuild its Internet business in the near future.

For its part, C&W will become a much larger Internet player. "It was an unexpected opportunity, but a great one," a spokesman said.

The MCI/WorldCom merger still requires approval by the FCC.

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