EarthLink Acquires Deltacom

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| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

EarthLink Acquires Deltacom

earthlink logoI had to check the calendar to make certain it was October 1 and not April 1 when I read the headline that EarthLink bought Deltacom.

Deltacom has a lot of fiber in the Southeast - 35 metro rings and 16,400 total route miles of fiber across 14 states - that generates about $440M in annual revenue. That revenue comes from 32,000 SMB customers. EarthLink will combine this with its New Edge Networks subsidiary.

As Gary Kim points out, New Edge targets Enterprise customers with its nationwide DSL/T1 network. Deltacom mainly sold T1 to SMB in the Southeast. Neither do it particularly well, however, as evidenced by the revenue numbers.

Deltacom's fiber and collocations are mainly along the IFN system. Interstate FiberNet was the backbone of the fiber network, but you couldn't find anyone at Deltacom that could price it or sell it. Stuck in a T1 mentality, they missed opportunities to sell OC-x services.

In a marketplace that has regular headlines about the Death of the T1 and with broadband delivering 10MB x 1MB and more, T1 and ADSL have to be sold differently.

Certainly, EarthLink is making a switch from its consumer heritage to business users, but that marketplace has different perspective on telecom and varying sales triggers.

It will be interesting to watch how the newly formed MegaPath/Covad/Speakeasy competes against New Edge in the coming months, since MegaPath/C/S has put a lot of marketing strategy around their roll-up.

It will be interesting to see what ELN does with ITC and especially IFN. It's a lot of fiber, but just having fiber doesn't mean anything. Plenty of companies have sat on fiber that they just couldn't monetize sufficiently. You have to sell densely on-net or within short laterals. That is not something that has been done in the telecom space.

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