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HALIFAX -- In 1998, Core Networks consisted of three software developers with an idea, working on computers in the living room of a south-end Halifax apartment.

"It was a 900-square-foot apartment and we set up a living room with three desks and that was our office," Chris Thornhill, one of the founders of Core Networks and director of systems architecture, recalled in a recent interview.

Last month Core Networks, which developed software to manage and upgrade broadband Internet services provided through cable, was sold to U.S. software service giant SupportSoft Inc. for $17-million (U.S.).

Today Mr. Thornhill, who will continue to work with Core under the new owners, marvels at how the company survived and grew when so many other Internet service providers flopped spectacularly.

The software developer and entrepreneur Jeff Campbell were in their 20s when they left Halifax Cable -- it later became EastLink Communications -- after helping develop systems to provide Internet services over television cable.

When cable companies began providing Internet services in the early 1990s, they had to send out installers to hook up the modems and computers. Mr. Thornhill and his colleagues began working on a system that would automate the process, allowing cable subscribers to sign up for the Internet on-line and to hook up with a modem they could buy at an electronics store.

The software that came to be known as CoreOS bundled all the Internet services for the user and provided information to the cable company on the user's activity. The system also enabled cable company customer service representatives to quickly get information to assist Internet users who had problems with their systems.

"Cable companies came out with a standard [service] and we saw potential in that to start a company," Mr. Thornhill said. "We saw what we thought could be done rather than just doing the bare necessities. It's not very glamorous."

But the idea of a single service package caught on. The first client for the newly minted Core Networks in 1998 was Mr. Thornhill's former employer EastLink. Then Atlanta-based Cox Communications signed on, and within three years the small Halifax company was providing broadband services in South America and New Zealand with customers such as TelMex, the Mexican phone company and Comcast, a major cable provider around the world.

Venture capital was provided by Royal Bank of Canada Financial, Sky Point Ventures and ACF Equities, both of Halifax as well as Lake Street Partners of California.

Mr. Campbell, who received several awards for his entrepreneurial efforts, left the company abruptly in 2002 for what he cited as personal reasons. Mr. Thornhill and a staff that grew to about 50 employees continued to expand the suite of broadband services in the company's new offices in a suburban Halifax business park.

Core Networks president Craig Soderquist said that in recent months company executives realized they had to find more financing to expand their services and attract larger clients.

But when he approached potential backers, he found several companies who wanted to take over Core Networks.

"The best way to unlock the value and potential in this operation was to team up with a bigger company," said Mr. Soderquist, who comes from California. "Having the financial clout of a large public company also helps you. When you're selling software to software providers who are rolling this out to millions of people and modelling their own business practices around that sometimes there is a reluctance to buy from a small startup."

The private company doesn't release its financial results but Mr. Soderquist said it is projecting revenue of between $8-million to $12-million over the next year by attracting major clients on the scale of AOL Time Warner, Verizon and Bell South.

Rhada Basu, chairman of SupportSoft, which specializes in providing broadband management services to large companies, said the acquisition of Core Networks will expand its range of services for the network of home and small businesses as well as expanding its technology base.

For Mr. Thornhill, the sale of the company hasn't made him richer -- he has only a small shareholding in the company he founded -- and he's excited about teaming up with SupportSoft developers.

Under SupportSoft ownership, the Halifax office of Core Networks will continue to develop new products for broadband software.

"They're not taking away any technology and this just opens up more opportunities to write more products and do it the right way," Mr. Thornhill said. "Most software companies don't make it and we've kept more than 40 local people employed for five years and we expect to see some expansion."

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