Intermedia snaps up switches, Deal accelerates Florida-based CAP's network growth

Competitive access provider Intermedia Communications Inc. last week bolstered its expansion plans with the acquisition of five operational Northern Telecom DMS-250 switches and related network infrastructure from Telco Communications Group.

The switches were originally part of a joint venture network built by IBM and Sears for a private network, said Bob Van Dyke, division vice president for the network design engineering unit of Tampa-based Intermedia. The companies abandoned the project, and Telco bought the network in March. Telco then announced plans to sell the switches, and Intermedia jumped at the chance to exceed its expansion goals for this year.

"We saw this as a huge advantage for time to market at fundamentally less cost," Van Dyke said.

Intermedia had planned to have 15 switches in place by the end of the year, but last week's buy moves that number to 19 - Intermedia had already planned to build a switch in Dallas.

The company's key differentiation is its focus on frame relay services, according to Bill Garrahan, vice president and telecommunications services equity analyst in Lehman Brothers' Washington office. He described last week's deal as a smart tactical move.

"It accelerated their time to market, they got switches and facilities at a good price, and they picked up signaling infrastructure and software that will allow them to introduce enhanced services into the market," he said.

"Intermedia is moving so fast right now, there's a blue shift around the organization," Dan Taylor, senior analyst at the Aberdeen Group in Boston, said.

He described Intermedia as "a good company doing the right things," adding that he sees it as a serious threat to major telcos, especially BellSouth, in whose home territory Intermedia primarily operates.

"Intermedia is more than a one-trick pony," he said. "Their model is how telcos will look for the long term."