Sizing up the deals:
Looking to expand the size and scope of its newly created Business Unit, EarthLink (Nasdaq: ELNK) made an aggressive push in 2010 to expand its fiber and network footprint by acquiring not only ITC^Deltacom, but also One Communications.
While the New Edge network gave EarthLink a presence in the business world ... it needed scale the business to compete for larger business accounts.
Why are these deals significant?
Prior to its purchase of the former New Edge Networks in 2006, EarthLink was mainly known as provider of dial-up Internet and broadband DSL access to consumer customers.
And while the New Edge network gave EarthLink a presence in the business world with a host of new services, including MPLS and Ethernet, it needed scale the business to compete for larger business accounts.
First up is on the acquisition target to create was ITC^Deltacom. Upon wrapping up its acquisition of ITC Deltacom, EarthLink began the process of integrating its New Edge Networks and EarthLink Business Services operations with Deltacom and will then market the combined services under the "EarthLink Business" brand.
From an asset perspective, EarthLink's acquisition of ITC^Deltacom gave it a deep network asset base. Earthlink not only got a 16,400 mile fiber network in the Southeast--75 percent of which is either owned or controlled through Indefeasible Right of Use (IRU) agreements--but also a 14-state Synchronous Optical Network backbone with 35 metro fiber rings, 294 collocations and 20 voice and data switches.
Along with network assets, Earthlink also gained 32,000-strong customer base that includes small and mid-sized business, multi-location enterprises, government agencies and wholesale customers in the Southeast.
While ITC Deltacom gave Earthlink an expanded presence in the Southeast, One Communications added another piece to the puzzle with an instant IP network footprint not only in the Northeast, Midwest and Mid Atlantic regions, but also gain overlapping connection cities with EarthLink Business (formerly Deltacom) long-haul routes in major markets including Washington, D.C., Baltimore, Philadelphia and New York City.
Taking into account its acquisition of ITC Deltacom, Earthlink's acquisition of One Communications gives it a combined 28,000 route mile fiber network across 27 states, 923 colocation facilities, 55 IP and circuit-based switches and 68 metro fiber rings.
Brian Washburn, Research Director, Network Services, Current Analysis in a previous interview with FierceTelecom said that while Earthlink could face some challenges in integrating the One Communications assets into its fold, the acquisition provides it with geographic scale.
"Combined with Deltacom, the company will build a super-regional CLEC that reaches from Maine to Florida, westward to Texas, Wisconsin and Illinois," he said.