Ottawa-based optical firm Meriton Networks Inc. increased its customer count by 50 per cent on Tuesday with the addition of three new regional telecom firms in the U.S.

The new customers are small rural service providers eager to take on their bigger rivals. Unlike many of those larger players, these service providers are in need of more network capacity, rather than trying to work through a surplus.

To expand their service offerings, the three firms turned to Meriton for its wave-length networking technology.

Meriton's hardware combines switching and transmission of data in a single box, rather than the two commonly used by service providers. The integrated unit reduces costs for service providers and provides more flexibility in their network.

The largest deal was signed with Sho-Me Technologies, the fibre-optics subsidiary of Sho-Me Power Electric Cooperative.

Sho-Me is a player in what Meriton calls the u-telco, or utility-telecom, market, in which power companies attempt to commercialize a broadband backbone built to monitor their power grids. Ottawa is home to one such u-telco--Telecom Ottawa. Meriton signed up Telecom Ottawa as its first Canadian customer in March.

Sho-Me Technologies is a cooperative of nine utilities. It is part of the 20-member Cooperatives' Broadband Network, which has network coverage in three states--Missouri, Oklahoma and northwestern Arkansas.

Rob Gaudet, director of product management for Meriton, said the order from Sho-Me is valued at about $1 million. However, the potential for repeat business and additional orders from the other members of the Cooperatives' Broadband Network means the deal could ultimately be worth much more.

The second new customer was Fidelity Communications Co., a diversified Competitive Local Exchange Carrier (CLEC) that operates throughout Missouri. Fidelity will use Meriton's technology to expand its Video-on-Demand service.

Goudet said the distinguishing characteristic of the Fidelity deal was "validation". Meriton beat out a field of 10 established competitors to win the contract.

Lastly, Meriton signed on Pioneer Telephone Cooperative Inc., the largest telephone cooperative in Oklahoma and the third-largest in the U.S. Pioneer is a multi-service communications company with more than 140,000 customers in 30 counties.

Goudet declined to offer specifics on how the latest contract wins impact Meriton's revenue and profitability targets, or precisely what those targets are. But generally speaking, the company is on track.

"We're right on track to the business plan we set out last fall," he said. "...our pipeline for the rest of the year is matching that.

"2004 is looking very good for us ... we think we're in very good shape heading into 2005."

So far, the company's market traction has come in North America. Meriton has sales offices in the U.K. and Singapore and is working with service providers in Asia and Europe, but has not yet garnered any revenues from those markets.

When Meriton announced the deal with Telecom Ottawa in March, CEO Mike Gassewitz said a third round of venture capital will be needed in the near future and emphasized he intends to build the company into a publicly traded firm.

Gassewitz was travelling this week and was not available to comment on the latest contract wins.

Meriton has received more than $60 million in venture capital in its four-year history, most recently a second round worth $26.4 million in December 2002.