Compaq Computer Corp, demonstrating that its commitment to being an internet company has it limits, has sold the Palo Alto Internet Exchange (PAIX) to AboveNet Communications Inc for $75m, comprising $70m cash plus an agreement to provide services to Compaq worth $5m.
The PAIX, formerly known as the Digital Internet eXchange, before DEC’s acquisition by Compaq, is one of the main exchange points that ISPs use to exchange network traffic with other service providers. Others include MCI WorldCom Inc’s MAE (Metropolitan Area Exchange) East in Vienna, Virginia and MAE West, in Palo Alto and the New York network access point, operated by Sprint Corp.
The advantage PAIX has over the others, says AboveNet is that it is not owned by a major phone company and therefore can operate in a more open fashion, without the emphasis on selling lines from one company. AboveNet intends to run it as a separate organization with its own board of directors and will retain the current management team, led by general manager Laura Hendriksen. The PAIX began operations in July 1996.
AboveNet is using some of the money it raised from its secondary offering at the end of last month for this transaction. It raised about $240m before expenses in the offering, having only gone public in December 1998 (05/03/99).
