In the 1980s, Cable & Wireless Plc laid its fifth undersea fibre optic cable to Bermuda. Yesterday, the company launched a subsidiary that may actually justify that amount of capacity.

The new business is Cable & Wireless eBusiness Ltd., a web hosting company set up in Bermuda at a cost of $10 million (and separate from Cable & Wireless (Bermuda) Ltd., which provides long distance and other services).

A year after it was incorporated, the company is now trying to convince global corporations who conduct transactions online to move their heavily-visited websites to Bermuda to save on taxes and avoid overbearing regulators.

C&W eBusiness officially began operations in July (yesterday's event, held at the Bermuda Underwater Exploration Institute, marked the official launch), and since then the company has had some success. So far, the company has won three major contracts, including a three-year, $700,000 agreement to host and monitor Internet servers for Sea Supplier, a company which sells marine supplies and services online to ship operators.

Cable & Wireless is by no means the first company in Bermuda to offer website hosting and data services; Internet (Bermuda) Ltd. (now Logic Communications) started doing that soon after it began providing commercial Internet access in 1994. But Jorgen Clausen, head of marketing and business development for C&W eBusiness, said the company's services are the first in Bermuda capable of meeting the demands of major websites, like large travel portals (although TeleBermuda International disagrees - the company opened a $1 million hosting facility at Southside in 1999, which a spokesman described as the most secure site on the Island, capable of handing small and large websites).

C&W eBusiness's access to the undersea cables of its parent, plus a satellite dish for backup, has certainly helped it get started. But the central component of C&W eBusiness is a purpose-built hosting facility at Cable & Wireless' property in Devonshire.

The building, known as the eBusiness Solutions Centre (eBSC), has 2,500 square feet of space to house computers and other communications equipment and was engineered to withstand obstacles to keep customers website up and running no matter what. According to a press release, the building is 220 feet above sea level (safe from storm surges), the walls can withstand winds of 175 miles per hour and there are two alternate energy sources in case the power goes out, including three diesel generators with a fourteen-day supply of fuel on-site.

Inside, customers either co-locate (provide their own equipment, which C&W connects to the Internet and maintains) or use dedicated hosting, whereby C&W buys the necessary hardware (or uses what is already available) and leases it back to customers.

With Web-Commerce, a payment processing service, C&W can also settle credit card transactions for its clients.

All of the products are customised to clients, and none costs less than $10,000 a month. According to Mr. Clausen, the cost of hosting offshore is about 15 to 20 percent higher than in North America and Europe (although some services cost the same), because Cable & Wireless pays duty on the equipment it brings to the Island. But he added that companies can recover that cost (and more) through tax savings and reduced administrative costs.

Mr. Clausen said the facility in Devonshire the most advanced in the Caribbean (Bermuda has become the regional hub for the company's e-business activities) and even better than most of C&W's hosting facilities around the world, which total 250,000 square feet. But it is pretty small, about the same size as a three-bedroom house. As Mr. Clausen explains, that is because it is just a preliminary step in Cable & Wireless's offshore e-business strategy.

"We have a lot of leads that are going to require a lot more space," he said, predicting the business' growth. "Fortunately, we have a lot of real estate (in Devonshire)."

Depending on what kinds of websites C&W hosts, the capacity from the Island might soon inadequate as well. Data-intensive websites like digital music vendors or image archives will quickly use up the bandwidth, Mr. Clausen said, and C&W would have to lay more cables.

So far, C&W's new business has 12 employees, with two more scheduled to arrive from the Cayman Islands, pending work permit approval (Mr. Clausen came from the Caymans in May).

"It's a great development for Bermuda," said Pat Philip-Bassett, chief executive officer of the Bermuda International Business Association

"One of the good things about our jurisdiction on the telecommunications and technology front is the quality of services available."

As Ms Philip-Bassett pointed out, C&W eBusiness provides many services (web hosting, website management and payment processing) offered individually by several companies in Bermuda.

First Atlantic Commerce, for instance, provides payment processing to mid-sized and large websites, while Bermuda Computer Services, through Transact-e-biz.com, offers payment processing and offshore web hosting for small and large clients (and both keep their equipment at the C&W facility in Devonshire, in a separate building from the eBSC).

Mrs. Phillip Bassett welcomed the competition, but no-one else seemed to fear (or would admit) that Cable & Wireless's facilities will take away business from other Bermuda Internet companies. Mr. Clausen said that the facility will attract high-end business to Bermuda that would not come here otherwise.

At yesterday's event, he was also keen to emphasise the facility's impact on Bermudian companies. Most of the corporations with websites hosted there will want to incorporate in Bermuda, Mr. Clausen predicts, and will require the services of lawyers, accountants and other professionals.

C&W eBusiness has partnered with Conyers, Dill & Pearman and refers clients to the firm for legal work.

John Buckley, CD&P's general manager, said the firm will provide incorporation and corporate secretarial services.

"This potentially extends are marketing reach by Cable & Wireless bringing prospective clients to Bermuda," Mr. Buckley said.

"But its in its infancy as far as we're concerned, although we're hoping it will become more significant."

The hosting centre in Devonshire is one of several initiatives by Cable & Wireless to reposition itself globally. Except in the Caribbean, the company has divested its telephone businesses to concentrate on providing data services, with plans to quadruple its hosting facilities around the world to 1 million square feet.

Eventually, the company hopes to be the largest Internet hosting company in the world; it is currently third.