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Customer and Partner Perspectives of the Covad-MegaPath Merger

April 2, 2010

It’s Friday — the end of a rather busy (maybe more like a whirlwind) week here since we announced on Wednesday that MegaPath had reached an agreement to merge with Covad Communications. Right away we started reaching out to customers and partners to share this news, and to explain the real business and services benefits that will be possible by combining MegaPath’s wide selection of products and value-added services with Covad’s robust network infrastructure.

What the Merger Means for Customers

Combining MegaPath and Covad resources will enable us to expand service offerings to customers, as well as provide more choices and value. Frankly, customers have been asking us to take a broader role in helping them meet their evolving business communications needs, and we can feel confident in our ability to meet customer needs as the only managed service provider capable of providing a full range of Internet, voice, security, and VPN services — all backed by a nationwide network. This is really an exciting place to be.

What the Merger Means for Partners

By bringing together the 4,400 central offices in the Covad nationwide network infrastructure with the managed IP data, voice and security services business that MegaPath has built, we’re creating a new class of CLEC; a Managed Services Local Exchange Carrier (MSLEC). Covad has the largest facilities-based competitive network in the U.S. Essentially this strength will make MegaPath’s service portfolio available virtually anywhere our partners are doing business.

Overall Positive Feedback

Back to the whirlwind pace. A significant part of that pace has come from talking with many of our media contacts at technology, trades, daily, and online publications who wanted to learn more about the Covad-MegaPath merger. I feel fortunate that the reporters, editors, writers, and bloggers we communicated with this week really jumped on the value and potential involved in our merger. It was encouraging to read their perspectives. In fact, I’d like to share a few comments because their words really speak louder than mine.

[Covad and MegaPath are] “counting on next-gen services, sold through direct and channel sales forces, to catapult them to the top of the managed services heap. And if statistics hold up, Covad and MegaPath are on the right track. In just the SMB word alone, about 30% of companies plan to implement managed services this year, according to a January report from the Computing Technology Industry Association (CompTIA).” — Kelly Teal, VON

“If you combine that already impressive number [over 19,000 SMB and enterprise customers] with the new customers MegaPath can reach through Covad’s infrastructure, the logic for the merger becomes clear.” — Matthew Weinberger, MSPmentor

“Erin Harrison [of TMCnet] believes this is some of the biggest industry news to emerge since Nortel’s assets were auctioned off.” — Rich Tehrani, Communications and Technology Blog

“When I heard this announcement today, I had to smile: ‘Someone listens!’ . . . These companies already wholesale DSL to the ILEC’s and to some CLEC’s (like XO). Creating one entity – eliminating any duplication – with a complete database of facilities means that sales can increase. Why would they increase? One stop shopping. Makes it easy for agents, partners, and businesses.” — Peter Radizeski, On Rad’s Radar blog

“This is definitely one of the more interesting deals of the past six months,” said Brian Washburn, network services research director of Current Analysis.

As we move ahead, I’m interested in hearing your thoughts, and look forward to reading your comments. Feel free to share!

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