James Akerhielm

One of the keys to survival these days seems to be the most obvious one — having a broad product portfolio. Another is to have the cash to build the infrastructure to offer those products. Now that NewSouth Communications' “build it and they will come phase is done, and done successfully,” according to new President and CEO James Akerhielm, the company can take its new first-quarter $85 million infusion and take aim at profitability.

Akerhielm, who took over for former President and CEO Michael LaFrance in April, says that despite the economic climate, his company is stronger than it was six months ago. “When you get partners willing to put in additional money in tough times in arguably a very, very tough space, that speaks to the core competencies and great foundation of network and human resources,” Akerhielm says.

With that kind of financial vote of confidence, it is easy to understand why Akerhielm sees his company among the survivors in a space that has suffered casualties and will likely suffer more.

And from his vantage point, the downturn in the telecom space is necessary. “Not that the medicine was necessarily tasteful, but at the end of the day we will have more efficient CLECs with more refined operational plans and business plans executing better than they were a year ago, which means more competition for the ILECs,” Akerhielm says.

The BellSouth competitor will compete on several fronts with its nine-state, 41-market network. While NewSouth believes that softswitch technology is imminent and says it will evolve its network accordingly when the time comes, the carrier will continue to compete with voice and data services built on Lucent 5ESS and Siemens EWSD technology, as well as new services such as managed firewalls.

Completing its network buildout was a key factor in NewSouth's ability to survive and compete, according to one analyst.

“They just beat the market to the punch by finishing their network and getting into the markets they wanted to be in. A lot of other CLECs were still going through their expansion phases when the markets dried up,” says Jason Knowles, analyst with Current Analysis.

Eighty percent of NewSouth's 100,000 customers are voice users, of which 60% are local and 20% long distance. Of the remaining 20%, data accounts for 5% of the carrier's business, and systems sales make up 15%. “More than 20% of our customers have bundled services,” Akerhielm says.

NewSouth's new focus and the target for the bulk of its capex dollars will be on customer acquisition. With 13,000 data lines sold as of March, the company expects to raise data well beyond its current 5%.

However, analysts question whether NewSouth's completed network rollout includes the 13 markets originally slated for its “Screamin' DSL” rollout in June of last year and what effect that may have on the company's ability to raise those data rates.