Looking to offer its small and midsize business customers more than just voice services, Nextlink Communications this week announced that it is buying Concentric Network for US$2.9 billion.
Nextlink expects that Concentric's existing virtual private network (VPN), digital subscriber line (DSL) and Web hosting services will be a natural fit for Nextlink's new and existing customers.
Until recently, Nextlink has primarily been a voice carrier, but over the past 12 to 24 months has invested nearly $2 billion building an arsenal of network assets from a long-haul fiber backbone to fixed wireless service licenses. The goal: to offer business users competitive local and long-distance voice and data services.
Concentric is a nationwide ISP that supports more than 100,000 customers. The ISP has five data centers, 19 points of presence around the country and DSL service available in 19 cities.
Through a deal with Level 3 Communications, Nextlink has been building a 16,000-route-fiber-mile nationwide network and is offering local voice services in 40 markets, but the company has been lacking any firm data services.
And instead of developing the services in-house, Nextlink decided to buy the services and network from Concentric.
"Concentric is an Internet service leader in terms of Web hosting. It is a huge company in terms of high-speed DSL access and VPN services," says Dan Akerson, CEO and chairman of Nextlink.
Concentric also has strategic partnerships that make the ISP a good partner for Nextlink.
For example, Concentric has a multiyear deal with Corio, the Redwood City, California, application service provider, and with SBC Communications.
Concentric hosts the majority of Corio's application and database servers, and provides SBC with access to customers outside the local exchange carrier's traditional service areas.
Concentric is also in the process of acquiring Internet Technology Group, an ISP based in the U.K. that will offer Nextlink access to a new international customer base. Concentric's acquisition of ITG should not affect Nextlink's acquisition of Concentric.
Nextlink also announced last week that it completed its broadband wireless local multipoint distribution services trial in Los Angeles and Dallas, and is planning a 25-city LMDS rollout by year-end.
Customers in Dallas are accessing the Internet over their LMDS links.
"The service runs like a charm," says Mike Hennefer, president at Corporate USA, a commercial real estate company in Dallas.
During the trial, Hennefer also switched all the company's local voice services over to Nextlink because it was pleased with Nextlink's customer service and quality on its wireless connection, he says.