Case Overview: Pegasus (Australia)

Written by Karri Munn-Venn

Pegasus - www.pegasus.com.au
(no longer a member of the APC)

Person Interviewed: Paul Wilson, pwilson@igc.org

Pegasus’ Service Offerings prior to Privatization:

• Connectivity Services
• E-mail
• Conferences
• WWW Hosting

c2o’s Current Service Offerings:

E-mailConferences WWW and Domain Name Hosting

Mailing Lists CGI Scripts Training

Foundations:

A member of the Rainforest Information Centre, a prominent Australian activist group, launched Pegasus in mid-1989. It provided e-mail and conferencing to a broad cross-section of organizations and individuals, many from the nation’s progressive social movements.

At the time, there was little funding for not-for-profits in Australia, so Pegasus was founded as a for-profit company with an AUS$100,000 ethical investment. Pegasus founder Ian Peter hoped that ethical investors would be less demanding of a return than their mainstream counterparts. This would provide the organization with a greater degree of independence in fulfilling its mission.

Early on, Pegasus struggled in an atmosphere of apprehension around the introduction of non-academic ISPs. As a result, the market for Pegasus services was quite small and space for technological advancement limited. Pegasus attracted many users who saw the potential of electronic communication. Unfortunately, complicated dial-up software discouraged many people and resulted in high user turnover. By early 1991, Pegasus obtained a connection to ARNOT, allowing users more regular and less costly Internet access. By late 1991, the situation was improved further when users were granted telnet access.

The Emergence of the World Wide Web:

In 1992, Pegasus became the first publicly accessible WWW server in Australia. Improved dial-up and PPP followed shortly. By the end of 1993, the WWW and online networking were gaining popularity. Technologically superior commercial ISPs and third sector Internet specialists began challenging Pegasus for its share of the market. Pegasus was shackled with text-based APC software and cash-strapped, long-time activist users who resisted change.

In an effort to satisfy the greatest number of users, the organization opted to offer old and new services simultaneously, forcing itself into a situation that required cross-subsidization of services. As a result, there were very few resources available to develop or promote new services, such as web hosting. Ultimately, Pegasus entered a period of severe financial strain.

By late in 1993, Pegasus began to feel pressure from private competitors in the ISP business. It needed to set itself apart from the larger, richer, more modern competitors by emphasising the value of community networking and the practical, day-to-day uses of the low-tech tools.

Around 1995, Pegasus had several opportunities to profile its email and conferencing strengths. The International Education and Research Network (I*EARN) project featured online community building among teachers and students across the globe. LandCareNet – a project executed in cooperation with several environmental ministries – facilitated communication among remote, rural organizations. Both of these projects achieved relative success, but not without substantial investment in basic training, which further drained Pegasus’ resources.

The Sale to Microplex:

The organization’s final effort to sustain itself was an innovative project supported by sponsorship advertising from the Australian Computer Society. It involved providing free Internet services. The income generated financed the switch from Intel to Sun-based equipment and expansion of the number of national POPs. Unfortunately, this deal was not enough to keep Pegasus ahead of the competition pack.

In order to break even it was imperative that it either buy another ISP, or be bought out itself. It had also become clear that Pegasus lacked leadership and direction. The organization wasn’t sufficiently entrepreneurial to advance its goals or to achieve financial success and it lacked the resources needed to pay a skilled business manager.

As a result, arrangements were made for Microplex, a large Australian ISP, to take over Pegasus operations. Microplex would retain Pegasus staff and continue to offer Pegasus services. The development of a not-for-profit arm to serve Pegasus clients was also discussed. In the end, however, the Microplex-Pegasus deal was very commercial and verbal guarantees about non-profit services did not pan out.

The Future of the APC in Australia:

There are indications that the critical mass necessary to support a mission-driven networking organization now exists in Australia. More funding is available for not-for-profit Internet businesses as a result of the market’s growth. There are also more organizations working with progressive sectors to meet online needs.

One of these is Community Communication Online (c2o), an Internet consulting company founded in 1997 by former Pegasus staff. It is the new Australian member of APC. c2o has been built slowly, taking care to develop services that will effectively meet the needs of APC clients and avoid the mistakes of its predecessor. c2o now serves community-based organizations throughout the Australasian region and has expanded its original consulting mandate to include training and web hosting.