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IQuest buys British firm, expanding local operations

June 1, 2009

The largest Indiana-based Internet service provider is going global, having bought a British company that monitors and manages data, voice and video networks.

IQuest Internet LLC said the purchase of London-based Global Network Operations Ltd. will add about 17 jobs to its Indianapolis operations at 2500 E. 46th St.

The 23-year-old IQuest currently has 40 employees. It provides Internet access to more than 400 large commercial clients, including hospital giant Clarian Health and e-mail marketing firm Exact Target.

Yet IQuest's high-tech operations center has plenty of underused capacity that made the deal a good fit, as telecommunications firms and other companies increasingly outsource their internal network operations centers, or NOCs, said Tom Dakich, general counsel for IQuest.

Newly acquired Global Network Operations keeps an eye on networks for numerous companies and organizations around the world. The work can be as remote as shifting Internet bandwidth for a school system in South America, where one school has excess capacity and another needs more.

One of GNO's employees in London keeps an eye on a banking network that links the United Kingdom and Central Africa, for example.

"This gives us a big global presence," Jack Carr, managing partner of IQuest, said of the GNO deal.

"We're going to touch 30 different countries in every shape and form" in voice, data and video, Dakich said.

IQuest said it paid about $2 million for GNO, which also has a facility in Tampa. In the months ahead, IQuest plans to make capital investments locally to essentially increase the size of the pipe between its operations and the Internet.

Carr declined to disclose the revenue generated by privately held IQuest.

The company could significantly increase its sales if it can further capitalize on the trend toward outsourcing NOCs, particularly in the United States.

The trend is accelerating as data-intensive companies seek to shed the costs of internal network monitoring and management. Even some major telephone companies are starting to outsource this once-core element of their operations. The first major U.S. telco to do so was Overland Park, Kansas-based Embarq Corp. Last year, it struck a deal with Nokia Siemens Networks to take over functions of its voice network operations center.

IQuest isn't looking to battle at that level. But Carr noted there are a "lot of mid-market telephone companies in the U.S."

Company officials lately have been trolling telecom trade shows to drum up new business monitoring and managing networks.

New acquisition GNO already performs outsourcing for a number of European telephone carriers, including some functions for British Telecom.

The appeal has been that newer technologies, such as voice-over-Internet-protocol, have eroded once-lucrative voice markets for phone companies, forcing them to invest time and money in other areas.

"Some of the most innovative service providers have realized that NOC services do not require the high-octane staff to carry out mundane surveillance activities," GNO says in its marketing pitch.

IQuest started out two decades ago focused on dial-up access to the Internet, aimed at residential customers.

Today, more than 90 percent if its revenue comes from the business market through a variety of high-speed data products.

In 2004, IQuest formed a joint venture with Shelbyville-based Lightbound, a provider of cable modem and other communications services in Shelby and Rush counties. In the years since, IQuest has been morphing its identity to take on the Lightbound name in the business end of the market. A primary reason is that many still associate IQuest with dial-up residential Internet service, Carr said.

"Over time, you'll see the IQuest name go away," he added.

IQuest has been out wrangling for other companies to buy.

"We are very interested in expanding our presence in both Indiana and in new markets," Carr said.

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