Electric firm gaining Web customers

Chugach Electric buys companies to increase market share

Posted: Tuesday, January 04, 2000

ANCHORAGE - Chugach Electric Association, the utility that feeds electricity to thousands of Alaska homes, has been gaining Internet customers by buying them.

Chugach is building its Chugach.net Internet service base by purchasing small companies, said Dave Smith, director of information services for Chugach.

Chugach has purchased six Internet service providers this year. The purchases are part of a strategy to build its Internet service in anticipation that the electricity industry will open to competition eventually, said Bill Stewart, Chugach's executive manager of administration.

Chugach estimates that 30 companies are vying to provide customers with Internet services.

The dominant Internet provider is General Communication Inc., which last year offered free service to some of its long-distance telephone customers. By Sept. 30, GCI had 39,000 Internet customers, the most in the state and an 18 percent increase in three months. But GCI also reported it was losing money on the service, posting a $525,000 operating loss on the Internet in the third quarter.

Chugach, which launched Chugach.net last January, also lost money in its Internet business this year but expects a profit in 2000, Stewart said.

``One of the ways to compete with GCI is to buy them,'' Smith said of buying up the customer base of small Internet providers. He said the cost of just advertising to bring in customers is prohibitive.

The Internet service companies Chugach has purchased this year include Matnet of Wasilla, two other Fairbanks-area providers called Santanet and Burnitup, and Girdwood.net. Those purchases increased Chugach's Internet customer base by fewer than 10,000, Smith said.

GCI's free Internet service has helped build its own customer base up to 53,000, including cable-modem customers, said David Porte, GCI's general manager for Internet services.

With that explosive growth, GCI has no plans to change its current strategy.

``We have a strong brand in the marketplace,'' Porte said. ``We are still going great guns.''

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