Railroad Spin-off Offers IT Services

Despite its recent embarrassing and costly IT problems, Norfolk Southern has spun out a subsidiary that plans to sell technology services to other companies.

Formed in October, Thoroughbred Technology and Telecommunications Inc. sees two markets: telecommunications companies and other railroads.

First, the Norfolk, Va.-based company plans to offer cable and fiber-optic services along its 21,600 miles of railroad tracks in 22 states. It will resell its cable and fiber capacity to telecommunications companies such as AT&T Corp. and Sprint Corp.

Another plan is to sell or lease space on its 400 towers to wireless companies.

Norfolk Southern now uses the towers for an internal microwave network.

Fast-growing wireless carriers are urgently seeking high, open areas - away from residential locations - to put antennae.

"We already have ongoing discussions with constituents of all of these groups, and I hope and expect that we will be announcing deals ... shortly," said Charles Moorman, president of Thoroughbred, in an October speech to Wall Street analysts.

Second, Thoroughbred will try to sell its transportation software to other railroads. Canadian Pacific Railway Co. has already signed up, Moorman said in his speech.

But customers will likely question Norfolk Southern closely about its ability to deliver on technology promises after its Conrail computer troubles.

"Absolutely, they will hear that question," said Tony Hatch, an independent railroad analyst in New York.

But, Hatch added, "they have every chance of success, because my guess is they will hire people who know how to do telecom."

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