The Intelos experience

It's an age-old military strategy. Begin with the aerial assault, overwhelming a region from your position in the sky. Then bring in the ground troops for fortification, creating a dominating presence from all possible angles.

It's also not a bad communications strategy, and it's one that more carriers are using to move from being a one-trick regional operator to being a nationwide provider of multiple services.

Intelos is one of them.

If Alltel is the industry's best example of a local boy that made it big in many service sectors, Intelos is probably the industry's best-kept secret. The company is a PCS provider holding licenses for 5 million pops in Virginia and surrounding states (Figure 1), but it also has close ties to the local, long-distance and Internet service sectors using technologies such as broadband wireless and fiber. Like Alltel, the company's plan of attack is to use wireless as an entry point and establish a customer foundation upon which other service relationships can be built.

"We really look like the most current industry acronym-ICP, or integrated communications provider-where in each market we can be the single point of contact for our customers," says James Quarforth, president and CEO of CFW Communications, the managing partner of Intelos.

Building on history Intelos may be a new name in wireless circles, but its founders boast a long telecom legacy. The company is a partnership of 11 regional independent telcos, most of which have been in business since the dawning days of telephony.

It's that wealth of experience that makes the founders and operators of Intelos feel qualified to recast itself as a next generation service provider.

The company put together its footprint of 5 million wireless pops by both extracting chunks of spectrum from various auctions and inking spectrum partitioning plans with bigger players such as PrimeCo Personal Communications and GTE Wireless.

"By partitioning to us, they could extend service into their markets much sooner," says Bud Zirkle, president of Virginia operations for CFW Intelos.

That somewhat piecemeal approach to network deployment significantly lowered the average cost of spectrum ownership and buildout, Quarforth says.

"We've been characterized as the Frankenstein model," he says. "We had to be very creative to acquire a cohesive footprint and make the buildout affordable."

To date, Intelos has built out 1.6 million of its 5 million pops using Motorola's code division multiple access infrastructure equipment.

The rest of the story Again, however, a mobile PCS offering is just the beginning of the company's overall plan to dominate multiple service sectors in the markets it serves.

"As we build each market for PCS, we're following that with the other three services," Quarforth says, naming Internet access, local service and long-distance as the company's next primary targets. An important part of that strategy is tying everything together behind the scenes to make it all transparent to the end customer.

"Over the last three years, we have built back-office services that allow us to provide integrated billing, customer care and retail stores," he says.

The PCS spectrum Intelos holds is not the only wireless component that will likely come into play as part of its multiservice strategy. The company also holds licenses to operate networks in the local multipoint distribution service, wireless communication service and multipoint multimode distribution service portions of the spectrum, and will tap into those areas as service delivery needs dictate.

"There's a significant amount of spectrum there that positions us to deliver services to our customer base by a variety of means," Zirkle says. "You're going to see a combination of delivery mechanisms."

As Intelos expands its service offering out from the wireless core, the fiber backbone it boasts will be crucial in pulling together markets that may not be next-door neighbors (Figure 2).

"The extensive fiber capacity we have has allowed us to tie our network together and establish points of presence in multiple cities," Zirkle says.

Like all wireless competitors, the continuing development of technology dictates that Intelos must stay abreast of the third generation issues that dominate much industry discussion. But the company is not unlike its wireless brethren in its hesitancy to commit to a certain direction, particularly because the 3G concept is still so nebulous.

"There's a continual thirst for higher data rates and faster access to the Internet," Zirkle says. "As a wireless company, we're well positioned to enter that market with the platforms that we have, but we're also looking at new developments."

Being different Communicating a unified message to its customers is likely one of the biggest challenges Intelos faces. Even some of the most advanced telecom customers still have a hard time envisioning their communications needs being fulfilled by a single provider, so the marketing approach a company like Intelos takes must be carefully and clearly delivered.

"The positioning of the company is in line with the product strategy we've taken in most of our PCS markets, where we offer customers the ability to bundle," says Rob Cale, vice president of marketing for CFW.

The pricing structure Intelos offers for PCS immediately puts the company on par with carriers that are competing on a national scale. The broad local calling area the carrier is able to offer is a function of its extensive fiber backbone, Zirkle says.

For example, for $50 a month customers get 750 minutes, and calls anywhere in Virginia from within the Intelos calling area are considered local. For $65, the local calling area expands to include five adjacent states and the District of Columbia, and for $75 it spans the entire country.

>From a positioning standpoint, the company doesn't see its wireless >offering as a hybrid between cellular and landline.

"We don't feel as though we compete directly with either," Zirkle says. "When you look at the profile of our customer base, it's not your average cellular consumer or landline consumer. It's someone who uses the phone a lot on a day-in and day-out basis for the added functionality."

The list of technologies the company will lean on to support its multiservice offering continues to grow. Recently, Intelos introduced a digital subscriber line service to customers in a portion of its Waynesboro, Va., market. The increasingly complex service set Intelos plans to offer also may include cable TV in limited regions, Cale says.

In addition, Intelos is offering up portions of its network on a carrier's carrier basis.

"We're talking to a number of carriers about reselling our network instead of deploying in this market," Quarforth says. "They can buy their services from us on a wholesale basis."

Intelos plans to offer the entire bundle of PCS, Internet and residential long-distance in most of its markets but may not extend a local business offering everywhere it plays.

"We're a bit more selective from a CLEC perspective in offering local dial tone to business customers," Cale says.

The drive behind Intelos is pure competition. The company clearly has the resources and is incrementally adding the technological components that will allow it to continue to develop a varied service offering. That, in turn, should continue to allow it to enter new markets with new services and take customers away from its competitors-piece by piece.

"In a competitive environment, you're not going to compete on things like price or the quality of a handset, you're going to compete on your ability to serve the customer," Quarforth says. "You have to have the offerings that appeal to the customer base and allow you to garner higher market penetration."

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