
DATE: Monday, April 21, 1997                TAG: 9704190376

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

COLUMN: SMALL BUSINESS SPOTLIGHT 

SOURCE: BY LON WAGNER, STAFF WRITER 

DATELINE: VIRGINIA BEACH                    LENGTH:   93 lines

BUYOUT MAKES BEACH FIRM PLAYER IN INTERNET BIZ

Until a couple of months ago, the entirety of Internet service provider Livenet's outpost on the Internet sat within one small, dark room in a long, metal building off Virginia Beach Boulevard.

Now, Livenet is expanding. It's still located on the side of the innocuous building, whose anchor tenant is Auto Boutique. Its door is still labeled in block letters: LIVENET.

But Livenet last month bought out friendly rival Easy Dial Inc., adding Easy Dial's 1,300 customers to Livenet's 1,100 and putting Livenet among the top half dozen local Internet Service Providers, or ISPs.

So the small dark room Livenet used to fill has been converted into the small dark office of its president and founder, 26-year-old Matthew S. Wendt.

Livenet, through its acquisition of Easy Dial, is seeking to become a player in perhaps the most brutal arena of the Internet business: providing access. Its national competition wears some of the better-known brands in American industry: AT&T, MCI, Sprint, Bell Atlantic, Cox Communications, America Online.

Its Hampton Roads-based competition is equally foreboding. ExisNet Inc., another Virginia Beach-based provider, has the highest quality rating of any ISP in Hampton Roads, President Steve Haynes says.

VisiNet in Newport News is building its own national system and sells dedicated Internet access to businesses, government and even other providers. Pinnacle On Line, one of the region's older providers, touts scaleable service; a customer can start out dialing in through modems and work up to digital access.

And there's Pilot Online, The Virginian-Pilot's Internet offshoot, which draws customers through the newspaper's content and the support of national Internet company InfiNet.

All of which may explain why one day last week Wendt looked like he was both having the time of his life and not getting much sleep. The 1988 graduate of Kempsville High School founded Livenet two years ago this month along with a colleague at Tidewater Computer. But Wendt kept his full-time sales job. He collected his first paycheck from Livenet three weeks ago.

``I would have sucked the company dry,'' Wendt said of foregoing pay. ``Every penny had to go to upgrades.''

Now he's earning that pay. The Easy Dial takeover wasn't a smooth one. Livenet had to take over quickly because ``they were in some serious trouble,'' Wendt says.

Easy Dial's reliability was not much to brag about; in fact, at least one other local ISP had looked at buying Easy Dial but backed off after checking out the operation.

Early in the transition, more than a dozen phone lines started going on the blink. Livenet's MCI link to Richmond went down. And somehow the e-mail domain easydial.com was removed from the central Internet registry.

``Everything smashed us at once,'' Wendt said. ``Everybody's e-mail was sitting out in Never-Never Land until the domain came back up. The phone lines were acting up.

``Once the domain came back up, we had 150 megabytes of e-mail. It was unreal.''

Livenet has since ironed out those problems. It boosted its access last week by 50 phone lines to 215. It has reserved another 100 lines so it can expand more quickly next time.

Those lines, including those reserved, would bring Livenet to about an 8-1 ratio of lines to customers and allow room for recruiting new subscribers. But Wendt and the other dozen Livenet employees aren't in the clear yet.

Part of the crunch of the ISP business is the continual need to upgrade equipment. Livenet, for instance, started in April 1995 with less computing power than many home users have today: a 66 megahertz server, a 300 megabyte hard drive, 32 megabytes of RAM and four modems. About $2,500 worth of hardware.

Today, they've got between $150,000 and $200,000 in equipment, and their prices are lower. Livenet used to charge a $35 setup fee and $24 a month. Now, it's no setup fee and $14.95 a month.

Wendt figures Livenet can survive amidst all the competition by shifting more of its focus toward corporate customers, and keeping its home-use customers because it is local.

``When you're a small business they want to deal with someone local that they can come in and talk to,'' he says. ``A lot of people don't want to deal with these great big conglomerates and get bounced around in voice mail all day.'' ILLUSTRATION: [Color Photo]

LAWRENCE JACKSON

The Virginian-Pilot

Following last month's buyout of Easy Dial Inc., boosted the

company's Internet access last week by adding 50 phone lines and

reserving another 100 so it can service more subscribers.

GRAPHIC

THE COMANY

WHAT THEY CHARGE

THEIR COMPETITION

[For a copy of the graphic, see microfilm for this date.]