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Covad, Megapath Merger to Create Nation's Largest IP Broadband Footprint

TMCnews Featured Article

March 31, 2010

Covad, Megapath Merger to Create Nation's Largest IP Broadband Footprint

By Erin Harrison, Executive Editor, Strategic Initiatives

In what's probably the biggest industry news to emerge since Nortel (News - Alert)'s major divisions hit the auction block, two California-based IP communications companies announced today they will combine operations to create what they’re calling the largest Ethernet, DSL and T1 footprint in North America.

Covad Communications Company, a national provider of IP broadband services, and MegaPath (News - Alert) Inc., a managed IP data, voice and security services provider, say they’re combining operations. 

According to company officials, the merger will create one of the largest managed service local exchange carriers in the United States. The combined businesses will have the largest Ethernet, DSL, and T1 footprint in North America and be the only MSLEC capable of providing a full range of Internet, voice, security and VPN services nationwide.

The companies could not immediately be reached for comment.

In a statement, D. Craig Young, MegaPath CEO and the new executive chairman of the combined businesses, said: “By leveraging the strengths of each company, we will provide customers and partners with expanded expertise, broader innovative services and a powerful network that simplifies the way they communicate and conduct business online.”

Covad (News - Alert) offers IP broadband services in more than 4,400 central offices nationwide through its commercial and wholesale distribution channels. The company announced on March 16 that it plans to launch nationwide Ethernet services next month, which will be backed by service level agreements.

According to MegaPath’s chief executive, the combined companied will focus on expanding service offerings and distribution channels to further their leadership positions in the SMB, enterprise and wholesale markets.

Earlier this month, MegaPath launched Duet Hosted, providing users with a fully-hosted VoIP offering that removes all management requirements that has the added benefit of access to the company’s private MPLS VPN network for the highest voice quality and stability.

Covad officials said they will continue to provide “innovative services and superior automation” to its wholesale partners, and by adding MegaPath’s managed service offerings.

“The combination of these two companies creates a powerful new business model that provides users and partners with the industry-leading connectivity and services they require to support their critical business communications needs,” said Pat Bennett, CEO of Covad, who will continue as chief executive officer.  

Company officials said that combining Covad’s network infrastructure with MegaPath’s selection of products and value-added services, the transaction promises to provide the company’s partners and customers with a superior selection of cost-effective IP voice, data communications and security solutions.

Covad wholesale partners include leading providers such as AT&T, Verizon Business, and Sprint (News - Alert); MegaPath delivers value-added communication services, including hosted VoIP, managed security, MPLS VPNs for connecting multiple sites, and SSL VPNs for connecting remote users and business partners. MegaPath distributes its services via a large direct sales force and channel sales partnerships, and has over 19,000 direct SMB and enterprise customers.

The combined businesses will be owned by Platinum and MegaPath investors. Terms of the deal have not yet been disclosed. The transaction is subject to federal and state regulatory approvals and is expected to close by the end of Q3 2010, according to company officials.

Erin Harrison is a senior editor with TMCnet, primarily covering telecom expense management, politics and technology and Web 2.0. She serves as senior editor for TMC's print publications, including 'Internet Telephony', 'Customer Interaction Solutions', 'Unified Communications (News - Alert)' and 'NGN' magazines. Erin also oversees production of TMCnet's weekly iPhone e-Newsletter. To read more of Erin's articles, please visit her columnist page.

Edited by Erin Harrison

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