PSINet buys capacity on FLAG to link Internets across the world

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London, Herndon, VA and Tokyo -- PSINet Inc. (NASDAQ: PSIX), the first and largest independent commercial Internet Service Provider (ISP), today announced it has completed an agreement with FLAG (Fiberoptic Link Around the Globe) to purchase STM-1 (155 Mbps) fibreoptic network capacity. The FLAG cable stretches over 27,300km, directly connecting Japan and the UK, landing in Korea, China (2), Malaysia, Thailand, India, United Arab Emirates, Egypt (2), Italy, and Spain. The network capacity will be used to further integrate PSINet's operations in Hong Kong, the Republic of Korea, Japan and the entire Asia/Pacific Region with PSINet operations in North America and Europe by creating a global network loop. Terms of the multi-million dollar agreement were not disclosed.

With this acquisition, PSINet's international network becomes the first independent Internet network to fully circle the globe, serving customers on three continents. The flexibility of FLAG allows PSINet to purchase and activate additional capacity quickly and to insert new connections anywhere along the cable's route toaccommodate PSINet's future networks.

The agreement provides PSINet with an immediate indefeasible right of use (IRU) on the STM-1 fibre capacity for the expected 24-year life of the FLAG cable.

"PSINet is committed to meet the exploding commercial demand for Internet services throughout Europe, North America and Asia/Pacific with the highest quality network and best products in the industry," said William L. Schrader, chairman and CEO of PSINet Inc. "PSINet's ownership of the fibre network and data centres worldwide, reduces our costs, increases our quality control and enables PSINet to cost-effectively provide customers with their mission critical needs. The new FLAG bandwidth reinforces this strategy, allowing PSINet to easily expand within Asia/Pacific, connect directly to our owned fibre on the Japan-US Cable in Miura, Japan, and specifically enables further growth by acquisition of other companies in international markets connected by the FLAG cable."

This new fibre capacity and PSINet's previous trans-pacific capacity purchases provides a redundant capacity interconnecting its existing Asia/Pacific operations in Japan, Hong Kong, and the Republic of Korea. Further, it increases PSINet's provisioning flexibility for a variety of Internet connection services and business applications such as voice, fax, Web hosting, leased-line access services, and Intranets. Redundancy provides PSINet customers with improved performance, reliability, and security, which are supported by PSINet's strong service level agreements (SLAs).

The FLAG agreement is PSINet's seventh fibre capacity acquisition in the past 12 months and is expected to be completely operational within the first quarter of 1999.

"Our primary growth targets are the top 20 global markets," said Harold (Pete) Wills, president and chief operating officer of PSINet Inc. "The competitive advantages that these network assets offer PSINet, combined with the attractive financial impact of fibre ownership and our outstanding suite of Internet services, supports our aggressive growth in an increasingly competitive market."

Andres Bande, chairman and chief executive officer, FLAG Telecom, said "This significant contract with PSINet, the world's largest independent commercial ISP, underlines the importance of the Internet in territories where FLAG lands. Our newly established New York office is ideally placed to work closely with our existing and emerging US customers as they build global networks to satisfy the bandwidth demands tomorrow predicts."

Headquartered in Herndon, VA, PSINet is a global facilities-based Internet Protocol (IP) data communications carrier focused on the business marketplace. PSINet offers a broad set of high-speed corporate LAN connectivity services supporting managed security and guaranteed Internet, intranet, electronic commerce, Web hosting services, and services for other carriers and ISPs. PSINet operates an international state-of-the- art frame relay and ATM-based, IP-optimized network consisting of more than 500 points of presence (POPs) around the world serving primary markets in Belgium, Canada, France, Germany, Hong Kong, Italy, Japan, the Netherlands, Republic of Korea, Switzerland, the United States, and the United Kingdom.

The FLAG cable system, with 14 operational landing points in 11 countries, provides high-capacity digital services to international carriers, resellers, and ISPs. The cable route spans many of the world's fastest growing economies and offers direct connectivity in regions that contain 75 percent of the world's population. Privately financed, FLAG is designed to meet the growing demand for international communications services, providing carriers with a world-class broadband superhighway.

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