Alternet Systems Primed To Revolutionize Multi Billion Dollar High-Speed Internet Access Industry

By Marc Davis, Managing Editor
April, 2003

The rapid growth of the Internet over the past few years has revolutionized the way we all do business. Indeed, an interconnected business world is an empowered business world. But the societal benefits of the Internet have been just as profound. They are merely more subtle and generate fewer headlines.

For instance, rural communities, particularly northern First Nations people, can now benefit from online access to the same wealth of knowledge and information as urban communities. Likewise for non-urban school districts. No longer is there a valid reason for "city slickers" to continue to regard country folk, especially students, as uninformed and unsophisticated.

However, there still remains one major hurdle to the full realization of a fully connected cyber society. And that is cyber congestion. Too many computers are trying to get online at the same time, clogging bandwidth and reducing download times to a crawl. It's especially problematic within the school system, in cities as well as in the countryside.

But an enterprising Canadian high tech leader, Alternet Systems Inc. (NASD-OTCBB-ASYI) has found the solution - one that is so cost effective, it could soon be adopted all over North America.

Launched in July 2002, Alternet Systems' (www.alternetsystems.com) high speed Internet access systems include SchoolWeb™ for educational institutions, 1nterLink™ for remote North American First Nation communities and CommunityWeb™ for isolated non-native communities.

Most recently, Alternet also announced the commercial launch of N.I.T.A HealthWeb -- the first truly nationally consolidated, web-enabled healthcare procurement and distribution program. This has been specifically designed to source, procure, sell and distribute medical, dental and health related products for exclusive use by the hundreds of healthcare facilities (hospitals and nursing stations) in remote indigenous aboriginal communities throughout Canada and the USA. This HealthWeb initiative has been forged by a strategic alliance between Alternet, MBG USA (Millennium Business Group), MHC (Millennium Healthcare Inc.) and their strategic partners at MMart (Medical Mart) and N.I.T.A. Inc. (Native Investment Trade Association).

This HealthWeb procurement program will use Alternet's web-enabled broadcast caching server technology. The technology is capable of providing geographically remote communities with a vast array of high speed Internet based services, and will be licensed to N.I.T.A HealthWeb to enable its web-based medical supply service.

Among these innovative Internet solutions, SchoolWeb holds the most potential to service the largest marketplace, consisting of up to 140,000 public and private schools across North America (a market worth a potential U.S. $1 billion in sales). The SchoolWeb solution has an innovative, proprietary caching (storing) technology solution that dramatically improves Internet performance. In fact, the SchoolWeb system typically delivers up to a twenty times increase in performance than a telecom T1 line (at 1.5MB/sec).

Meanwhile, CommunityWeb and 1nterLink are the company's two scalable Internet solutions, which can become the Internet Service Provider (ISP) for entire remotely located community via two-way satellite or existing telecom links. But CommunityWeb and 1nterLink go one dynamic step further than just acting as virtual private ISP networks. They also offer SchoolWeb's Broadcast Information Caching (BIC) technology, which makes the retrieval time of stored web pages almost instantaneous. There are over 5,000 rural and remote communities without high-speed Internet access in North America that can benefit from this leading-edge technology. And that's a marketplace that's worth up to U.S. $250 million, according to Alternet's management.

By targeting these large but poorly-serviced niche markets, Alternet is clearly on track to make a name for itself in 2003 and beyond. Indeed, the pivotal technological advantage that Alternet has over its competitors is the proprietary Broadcast Information Caching technology (BIC) that is installed on each server. Developed and tested over a period of several years, BIC delivers fast Internet access speeds by storing and updating previously visited sites. By archiving these sites in a cyber memory bank, BIC technology dramatically improves Internet access speeds so users don't need to purchase additional high-speed bandwidth.

This is a particularly timely innovation for North America's overburdened educational infrastructure. All too often, schools find themselves unable to take full advantage of the Internet as a teaching tool due to frustratingly slow web response times, even for schools with broadband connections. Typically, too many computers try to get online simultaneously, slowing response time to a crawl. This prevents teachers from using the Internet for teaching and students from doing research. Now, SchoolWeb can increase a school's Internet speed by up to 15 to 20 times, even for rural schools on a low speed telecom line.

Indeed, with SchoolWeb, reliable, super-fast access to web pages is achieved by its combination of sophisticated Linux-based caching software, a powerful Hewlett Packard server and unique system architecture. SchoolWeb educational content is managed by teachers at each school using SchoolWeb Librarian software. In such an instance, teachers can pre-request web sites any time up to the previous day before a class begins. Or caching can even be done dynamically during lesson time.

And SchoolWeb also comes with a suite of network and Internet services specially designed to benefit any and every Internet-enabled school. Additional features of SchoolWeb include e-mail, for every student and teacher, streaming video or broadcasts, firewall protection, and all network services.

It is particularly significant from a marketing standpoint that SchoolWeb is so highly regarded as a leading-edge solution that it has been selected as a Hewlett Packard Solution Partner Product. In other words, it is already being marketed by computer server manufacturer Hewlett Packard as an add-on solution that compliments this industry leader's line of Internet-related products. SchoolWeb has only been successfully beta tested in about 75 schools in Canada thus far. But now with Alternet's ability to "piggy back" on the international marketing reach of a brand name like Hewlett Packard, SchoolWeb is expected to achieve considerable market penetration within the next couple of years.

This is an appropriate juncture to look at the most dynamic feature of the SchoolWeb solution, namely the SchoolWeb Librarian. Simply stated, this allows schools to create their own Internet libraries. This programming software consists of a fully automated index and retrieval system that relies on a browser-based search engine and catalogue software that is accessed from the local server.

Here's a simple step-by-step illustration of how it all works. First, a student makes a request for an Internet web site. Next, the school's SchoolWeb server initially searches its memory to determine if the site was already cached (stored) locally. Then, if the web site is present in the local server, the information is delivered at LAN speed (usually 100 megabits per second) to the student. If the file is not available in the server cache, the server then searches the Internet (via the school's telecom link) and returns the relevant page, caching it as it does so.

What's unique about the system is the pre-caching facility. This allows teachers to cache educational web pages in advance of their use in the classroom. Furthermore, these sites are catalogued and searchable through SchoolWeb Librarian - the cache search engine. When a teacher requests a website, the desired site is broadcast overnight to the local SchoolWeb server. In a school district setting, a teacher's request is catalogued and broadcast to all schools, so that all teachers in the district benefit. All subsequent requests for this web site are now available at local area network speed from the local network. With three different levels of complexity from a simple search to an expert search, SchoolWeb Librarian can be tailored to ensure ease of use for any grade and expertise level. Also, a sophisticated filtering mechanism prevents undesirable web sites showing up in the search results.

How robust is this system? Besides a large, powerful server with large storage capacity, SchoolWeb includes redundant file systems, uninterruptible power supply and, if required, a small satellite dish. The server's remote monitoring and management software also enables automatic system diagnosis and self-repair, with the ability to activate redundant features that ensure the system will continue to operate until an on-site technician is available (to replace a disk drive, for example). Moreover, each SchoolWeb system is remotely monitored 24 hours a day. The sophisticated monitoring system can detect a malfunction often before the school is even aware of any problem. And Alternet offers all the customer service and support features that should help make this turnkey solution an easy sell.

The bottom line is that SchoolWeb is very affordable and offers significant cost savings to North America's education system. Once again, we're talking about up to 1,000 per cent more user capacity than a telecom line system of equivalent cost. An all-inclusive monthly leasing plan makes SchoolWeb affordable to any school district.

The same significant cost savings apply to Alternet's two other established solutions, CommunityWeb and 1nterLink. As previously stated, CommunityWeb works in much the same way as SchoolWeb but for an entire remotely-located communities or villages. And 1nterLink also functions in much the same way for First Nations communities.

The advent of such timely Internet solutions has been well-received by both the U.S. and Canadian federal governments. In particular, the ability to deliver cost-effective, unfettered online access to native communities is a major priority of both governments. In Canada, a $105 million program to get isolated communities connected to the rest of the world is being spearheaded by Andy Mitchell, Secretary of State (Rural Development).

"Broadband access will provide a number of opportunities to rural Canadians to access healthcare, education, lifelong learning and a competitive business environment," Mitchell said when he launched the program in late 2002.

"This will work towards the sustainability of our rural communities and help ensure that families and our youth can have an economic and social future in rural Canada."

Furthermore, the U.S. Federal Communications Commission recently launched a U.S. $2.25 billion fund to facilitate high-speed Internet access for U.S. schools and libraries.

Of course, Alternet's ability to capitalize on these developments depends very much on the drive and marketing acumen of its management team. In that regard, the company's initial shareholders appear to be in good hands. Alternet's president, Michael Dearden, has over 25 years of experience in sales and marketing, and for the past 15 years has focused specifically on corporate marketing and venture capital financing. Recently, Mr. Dearden was a director of Americ Corp., where he facilitated a successful merger with the Canadian e-commerce software developer, Rolland Virtual Business Systems.

Additionally, the company benefits from the extensive sales and management experience of its Vice President of Sales, Mr. Patrick Fitzsimmons. In a 22-year career in the high-technology marketplace, he has represented firms such as NCR, Timeplex, Rogers Cable, and Newbridge Networks, offering a wide range of technology solutions. His most recent position was Manager, Major Accounts, AT&T Canada in Vancouver. Also, Alternet's management team is further strengthened by the extensive company-building experience of Mr. Greg Protti. For nearly two decades, he has held sales and management positions in all segments of the high tech sector from SHL Systemhouse to Merisel Canada, where he was responsible for generating $200 million in sales revenue in Western Canada. Mr. Protti was most recently Vice President, Marketing for Sourcesmith Inc., a Vancouver software development company. Among the company's other key management personnel is Corporate Vice President, Mr. Griffin Jones. He has extensive experience in corporate marketing and finance and has worked with companies such as Nasdaq-listed wireless tire sensor manufacturer Smart Tire Systems, as well as North American Tungsten -- owner of the largest tungsten mine in North America.

In conclusion, SmallCapMedia believes that Alternet (which only came to trade in mid March) is one of the few high tech companies that are primed for a very successful year in 2003. By focusing primarily on the burgeoning billion-dollar-plus online "e-learning" industry, Alternet is at the forefront of an enormous, largely-untapped marketplace.

Imagine the prospect of Alternet succeeding in the near-term in capturing a mere one per cent of this U.S. $1 billion-plus North American market. That translates into sales of U.S. $10 million - a tremendous milestone for a small company with a low burn rate and a high profit margin. And that scenario does not factor in the international scope for SchoolWeb, as well as the potential U.S. $250 million market for Alternet's two proprietary ISP solutions. Nor does it factor in the unique marketing opportunities can now be realized through the launch of N.I.T.A HealthWeb - Alternet's jointly-owned, web-enabled healthcare procurement and distribution program for First Nations communities. Hence, SmallCapMedia believes that Alternet's share price has strong upside potential for 2003 with the likelihood of accelerated performance in 2004.