8(a) Graduate to Spin Off Telecom Company

8(a) Graduate to Spin Off Telecom Company

By Bob Starzynski
Staff Writer

Troy Systems Inc., an information technology graduate of the Small Business Administration's 8(a) program, will spin off a new satellite Internet company in the next two months.

Company officials at Fairfax, Va.-based Troy said the new company, TroyTel, will offer Internet service in foreign countries, reselling products and services to customers after purchasing capacity from numerous satellite companies.

"If we don't exceed $100 million [in annual revenue] in five years, I don't want to be here," said George Lissandrello, a senior principal with the group that will incorporate TroyTel. "That's a conservative estimate."

Lissandrello said TroyTel should be incorporated in the next two months and that company officials are currently seeking outside financing to add to an initial investment made by Troy Systems.

Troy Systems graduated last year from the SBA's 8(a) program, which grants special government contracting opportunities to minority-owned businesses. The company, which has 400 employees, posted $30 million in revenue last year. It has contracts with a number of agencies, including the departments of Transportation, Defense, Energy and Commerce as well as the General Accounting Office.

"TroyTel will be its own company, but I will be a significant investor," Boyer said. "We have always wanted to enter the telecommunications arena. And this business is taking on a life of its own."

Basically, TroyTel will pursue customers in foreign countries who either need mobile access to the Internet or lack the telecommunications infrastructure to bring high-speed bandwidth to their computers. TroyTel will resell the customer the equipment and services necessary to tap into a satellite Internet connection. TroyTel expects to purchase that capacity from satellite owner/vendors such as Comsat Corp. in Bethes-da, Md., Orion Network Systems Inc. in Rockville, Md., and Intelsat, a Washington-based alliance of telecommunications companies from around the world.

TroyTel is Boyer's second spin-off. An Internet services business for the publication industry, named Inex, was spun off from Troy two years ago.

K. David Boyer Jr., Troy Systems' founder and president

"There are many places in the world where you can't realistically run 500 miles of cable and make it cost efficient," said Peter Callowhill, vice president for Net2000 Group, a telecommunications wholesaler and consultancy in Vienna, Va. "If [TroyTel] has the ability to deploy such a service, it could really work out well for them."

As worldwide interest in communications and the Internet swells, Amer- ican companies are increasingly trying to determine how to bring services to Third World countries and other remote places, like ships at sea and oil drilling stations. Many companies, such as Orion and Comsat, are using their satellites to sell capacity to Internet service providers. Orion started teaming with ISPs last year and has established alliances with 50 Internet service providers so far.

"In January 1995, there were 800 [computers on the Internet] in Brazil. One year later, there were 77,000," said Dave Groobert, a spokesman for Comsat. "Computers are becoming cheaper and the international Internet market has tremendous potential."

Most Third World countries have government-controlled telecommunications monopolies that have been historically impermeable to U.S. service providers. Many of those monopolies are currently being deregulated and opened to competition.

Other telecommunications monopolies although still heavily regulated, are making agreements for international relationships that expand their customer services, said Lissandrello. He anticipates having to forge such agreements with foreign monopolies.