Anyone who thinks that gloom has descended universally on the telecom sector should listen to Steve Sanderson. The chief executive of Storm Communications, a UK-based optical network provider, is in optimistic mood - a striking contrast from many of his counterparts elsewhere in the sector.

Mr Sanderson believes there is a plethora of telecoms companies succeeding and flourishing among the bigger players, whose misfortunes are crowding out the success stories. In particular, he says, the debt problems of third-generation (3G) mobile service operators have poisoned the atmosphere for the rest of the sector.

"The debt problems aren't representative of the industry as a whole, although expenditure on 3G has changed the financial dynamics of the market," he says. There are certainly challenges, he concedes, including servicing the debt, and building the infrastructure required for 3G.

"There's the deployment of the new radio system," says Mr Sanderson. "The handsets have to be out there in the marketplace, and there's still some development to be done there. The radios have to be connected to a very high capacity backbone, because of the data content they're carrying."

Mr Sanderson believes Storm is in an ideal position to assist 3G growth - certainly across Europe, where the company's fibre optic backbone is already in place in Denmark, France, Germany, the Netherlands, Norway, Sweden, and the UK. The network is soon to be extended to Austria, Italy, Switzerland, and the US.

Storm was founded in January 1998, as a voice minutes reseller. Telenor (the former Norwegian PTT) was one of the company's major shareholders, as was the US company IXC Communications, which has since been rebranded as Broadwing. Storm had revenues of £52m in 2000, a 110 per cent increase on 1999.

Start-up strategies

Mr Sanderson is a qualified electrical engineer, who has spent more than 28 years in the telecoms industry. The last 18 of these have been spent creating and directing start-up strategies, either from within large corporations or from a new-entrant position. With Storm from its beginning, Mr Sanderson led a management buy out of the company early last year, backed by $200m in investments from Soros Private Equity Partners in February and Merrill Lynch in May.

"We've come into the market to facilitate the fast and high growth of data and the movement of information," says Mr Sanderson. "We were the first to put down an optical backbone without any legacy network." Rather than just be a provider of telecommunications, the company aims to become a provider and facilitator of communications and content for other companies trying to enter the telecoms field, whether in the wireless or fixed-line space.

"We have carriers as our main customers, along with internet service providers [ISPs] and application service providers [ASPs]," says Mr Sanderson. Storm's customers include WorldCom, Colt, KPNQuest, and AboveNet, and the company is also attracting large corporate customers, for whom it hosts content as well as providing them with an Internet Protocol backbone.

Mr Sanderson believes that after the crashes of dotcoms and telecoms companies over the last 18 months, all companies need to be prudent. "You must look after your balance sheet, offer your customers what they want, look after your cash, and service your business and shareholders well," he maintains. "We can't keep borrowing money, and expecting everything to be rosy."

The successful companies will have unique propositions, and Storm aims to be among them, he says. "It is an enabler for the companies that will inevitably come along, be they wireless or fixed line or 3G. We are employing sensible business management, rather than just saying, we shall build and they will come."

He sees both wireless and fixed-line telecommunications playing important parts in the future. "Wireless is a terrific medium for accessibility, but equally, technology is taking leaps and bounds in fixed-line accessibility," says Mr Sanderson. "You won't be able to have wireless without fixed in the future, and fixed won't service all the clients without wireless."

The future use of telecoms capacity will also change significantly, he says. "Most of the backbone networks started because of the requirement for carrying voice or traditional data services," he adds. Now, every one of us wants to bring a great deal of high bandwidth content to our desktop, to our Palm Pilot, or - in the future - to our mobile phone.

"That wave of data-centric information is ideally suited to a flexible low-cost infrastructure," says Mr Sanderson. "If you have a traditional network, then it's difficult to make that step to give high quality, broadband capacity to the new companies very quickly. If you have an optical backbone, as we have - we're the first and the only ones to do this internationally at the moment - then you're in a much better position to do that."

Storm uses switches from Sycamore Networks, the US optical networking product manufacturer, rather than the Synchronous Digital Hierarchy (SDH) equipment used by most telecommunications providers. Mr Sanderson explains that optical technology allows the flow of data to be increased or decreased easily, providing what the company calls 'bandwidth-on-command'.

Data highway access

"It allows you to move those data highways around very quickly," he says. "It's accessed by point-and-click technology, rather than the labour-intensive method of people making changes to a cross-connect point, which is what everybody else currently does."

Mr Sanderson is confident that, at present, the company has no competitors that can move forward as quickly as Storm. In the future, he says, new companies will come to the fore, which will also install new technology. "A lot of today's companies will not be able to discard their current technology, and will have to spend more money bringing in the new systems alongside the old," he warns.

"In the business today, you need to have an extremely low cost-base, and the new technology allows that," he adds. "Having that low cost-base, plus not having debt on the books, does give us a real lift up."

And what about those companies in the sector that don't enjoy such advantages? "A lot of the companies that are here today won't be there for the future. They will either be consolidated, restructured, or - dare I say it - no longer on the face of the earth," says Mr Sanderson.