Global Internet Market Beckons UUcom

Global Internet Market Beckons UUcom

Michael Carpenter photo

Lou Scanlan and Curtis Generous

By Bob Starzynski
Staff Writer

UUcom Inc. has nabbed a foreign contract that opens a new and lucrative market opportunity - providing Internet infrastructure support to governments abroad.

Company executives refused to identify the client, citing contractual obligations, but did say the country is one of the world's leading economic and political powers.

"The international Internet market is a tremendous market and there is a lot of money to be made there," said Eric Paulak, senior analyst for the Gartner Group in Stamford, Conn.

The Alexandria, Va.-based company will update computer networks for the unnamed country's government under the contract, which is expected to last one year. The company will also provide engineering expertise and install or improve data bandwidth.

"The country came to the realization that it needed a quick injection of high technology in [its] schools and universities and government institutions," said Curtis Generous, chief technology officer and a founder of UUcom.

"They have such high population growth, they decided that if they didn't do this now, they would fall far behind on the technology curve," Generous said. He would not reveal the value of the contract, which was not competitively bid.

"This is not the golden egg in our basket," said Robert BonGiovanni, UUcom's chief financial officer. But UUcom officials fully expect the work to open a new door for the company.

Generous, husband of UUcom Chief Executive Officer Lou Scanlan, said the company has begun talking with officials from countries in Africa and the Middle East that are discovering the same need for Internet infrastructure. Further contracts should follow in the next 12 months, he said.

With international communications needs skyrocketing today, entering the international market should give UUcom a big boost. Revenue, expected to be $3 million in 1997, is double last year, and should double again next year, according to Generous. In the next year, the company's work force will swell from 35 employees to 100 employees.

The nine-year-old company got its start by putting government agencies and companies onto the Internet before it was called the Internet and before computer networking was cool. In fact, it was UUcom that put the Securities and Exchange Commission's EDGAR database of company filings onto the Internet. Many local technology insiders label UUcom the hottest undiscovered company in the region thanks to its work with the SEC and major systems solutions for companies such as Erol's Internet and Bell Atlantic Corp.

While the Internet continues gaining international acceptance, companies are increasingly finding new ways to capitalize on the growth. One of the biggest ways to capitalize is to take technologies from the United States and apply them in countries that are not as developed.

"There are tons of potential clients out there for a company like UUcom," Paulak said. Such contracts could be a lucrative market for UUcom and similar high-end specialists. The company's largest competitors, Paulak said, are Andersen Consulting, Ernst & Young, McKinsey & Co. and Price Waterhouse. Scanlan argued that those other companies don't understand networking intricacies enough to be considered competition.

According to Paulak, 90 percent of the world's telephone companies are controlled by the governments in their respective countries and operate as monopolies. Although deregulation is finally hitting those markets, they are operating underdeveloped and overpriced networks. African, Middle Eastern and Latin American countries rank lowest on the list of countries with developed communications networks.

These countries do not have fiber optic technology and they lack the copper wiring that U.S. telephone customers have had for more than 50 years, he said. In fact, most Third World countries have fewer than 10 phone lines per 100 people.

More simply put, "infrastructure stinks in most of these countries," said Gary Arlen, president of Arlen Communications in Bethesda, Md., and a new-media expert.

What's worse, said Generous, is that Internet customers in many countries have to dial long distance to the United States for access.

UUcom will show a country where it needs copper, fiber or wireless infrastructure, what other networking technology it should employ and how the large, institutional systems can be linked together.

Not only does UUcom have a potential market with foreign governments and monopolistic telecommunications companies, it also has an untapped market with all of the hundreds of Internet service providers cropping up in each country.

UUcom is no relation to Fairfax, Va.-based UUNet Technologies, which is now owned by WorldCom Inc. in Jackson, Miss. However, both companies got the "UU" in their names from old computer networking protocol. The two "U"s stand for Unix to Unix, as networking was originally nothing more than linking two software systems together.

Over time, UUcom strayed from strictly networking computers for the federal government, although it still does 20 percent of its work with the government (primarily the Department of Defense). The future began to look very promising for the company a year ago, when it landed a contract with Erol's Internet in Springfield, Va.

According to Generous, he recognized that Erol's was experiencing serious growing pains as its consumer Internet service expanded outside the Washington area for the first time. "They were having scaling problems because of their rapid growth," he said.

Erol's took him up on an offer to fix its system, and UUcom began working with Erol's engineers to develop new network monitoring systems. The problems were quickly stabilized. Since then, Erol's has secured a reputation for reliable service and has grown 250 percent to almost 300,000 customers along the East Coast.

"They helped us to become more proactive," said Michael Berkley, chief information officer of Erol's. "Until we brought them on board, we were growing fast but not keeping ahead with our networks."

Word quickly got out about UUcom and the wonders the company could work. The company landed another contract this past February with Bell Atlantic Corp. of New York. With one of the largest mergers in telecom history pending with Nynex Corp., Bell Atlantic was concerned with adding thousands of users to its intranet. Over a three-month period, UUcom helped the company develop design goals for the intranet and create a new system.

"When communications companies break down or hit the wall," said Generous, "we're the ones called to remedy the situation."

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