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NewsGlobe: Currents
Integra Telecom branches out
Thriving CLEC sets new wave of consolidation
by Sean Buckley
Dudley Slater, CEO of Integra Telecom, has a lot on his plate.
Not only is he helping to lead the Portland, OR-based CLEC move through
an ongoing integration of the assets it purchased from Electric Lightwave
(ELI), it’s close to finishing its acquisition of Eschelon Telecom.
But even with all of those balls up in the air, Slater says what will get
Integra through this next phase of the company’s growth cycle, is to
provide a good service experience.
“It all goes back to that foundation of what I would describe to deliver a
unique proposition to the marketplace, which translates into demand for
our services and that’s what’s allowed us to create the financial metrics
that’s funding these acquisitions,” said Slater. “Even though this is a
unique time in the company’s life with this exciting growth it’s all the
result of the long-time focus on our customers.” (see Dudley Slater)
Founded the same year of the landmark FCC Telecom Reform Act of
1996, Integra Telecom is a rare breed in the competitive telecom service
provider industry that has seen a lot of fallen soldiers in recent years.
Outside of the RBOCs and large wholesale operators such as Level 3,
which has been snapping up various competitive carriers, Integra’s
acquisitions of ELI and the impending Eschelon Telecom are contributing
to the ongoing consolidation of the existing CLEC market.
“You got the capital necessary to drive consolidation and the economic
benefits to drive consolidation,” said Slater. “As long as those two things
continued to be aligned, you’ll see more consolidation.”
Bulking Up
Once its acquisition of Eschelon Telecom is closed, Integra will gain
expanded market presence in various Mid-West and West Coast markets,
including Minneapolis Arizona, California, Idaho, Minnesota, North Dakota,
Oregon, Utah and Washington State. (see Figure 1.)
Not surprisingly, Slater is confident its acquisition of Eschelon is a good
fit.
“It really brings a number of key benefits to the table,” said Slater. “We
are acquiring a very complementary set of customers that will benefit
from the value proposition we will offer.”
Similar to its acquisition of ELI, Slater says there could be various
economies of scale by combining the two companies.
One area of improvement will be on the network side. For example,
Eschelon has network facilities and rents fiber from other providers, while
Integra owns all of its own fiber and network.
“We can turn down those leases and transfer that network onto our
assets and provide a higher level of service, while eliminating a lot of
unnecessary expenses,” said Slater. “That’s just one example, but
there’s literally dozens of examples that are just as compelling as that
one that comes from the fact that we have this significant geographic
overlap.”
ELI Integration Moves Forward
While it won’t be able to fully realize the ultimate synergies of the
Eschelon Telecom purchase until the deal closes at the end of this
month, Slater reports the company is on track with the integration
process of Electric Lightwave.
Thus far, Integra has integrated each company’s work forces (sales,
sales channels) and has taken ELI’s customer base off the centralized
service model and placed it on its local-based service model.
In addition, Integra has integrated large parts of the two networks.
As a facilities-based carrier, Integra’s acquisition of ELI gave it 2,200-
combined route mile (160,000 fiber miles) metro network that have
access to over 580 buildings. What’s more, Integra also now operates
ELI’s 4,700-mile long haul optical network.
Since the beginning of this year, Integra has made various improvements
to the metro and long-haul networks by installing new optical equipment
to improve network speed and redundancy. Integra also made other
improvements, including full-path diversity for its Northern and Southern
long-haul routes and increased capacity to 400 Gigabytes and scale up
to 800 Gbps.
Despite these network and operational milestones, Slater says there’s
still a lot more work to be done.
“We have accomplished many of the important objectives we set out to
accomplish,” said Slater. “We’re not completely through that process
because of the complexity it does take a lot of time, but we’re on plan
with our expectations.”
SMB Service Expansion
But acquisitions and network upgrades are only one part of Integra’s
overall local service focus. The other element key to its drive throughout
the remainder of 2007 and 08 will be to build new SMB services in both
new and existing service territories.
One of the hot services for Integra has been its dynamic T1 service,
which can allocate bandwidth between voice and data needs for an
SMB.
“That’s been a very popular product that we launched in 1996 and it’s
continuing to sell very well for us,” Slater said.
Along with its dynamic T1 service, Integra has set out two other service
goals. First, it has begun to penetrate SMBs in the Electric Lightwave
territory with traditional POTS and DSL service.
Second, Integra in a targeted market approach, now sells 5 and 10 Mbps
data products initially in its Sacramento, CA market via ADSL2+ and it’s
eyeing emerging Ethernet over copper technology. (see:
Connections Up, but Fiber Penetration Spotty and Windstream’s Copper Play)
“We are very excited about those technologies because there’s a very
large number of small businesses that will never offer enough revenue to
justify building enough fiber into them individually,” said Slater. “If we
could deliver higher speed data services in a reliable way that will be in
great demand from these customers.”
Despite the promise of ADSL2+ and EoCopper, Slater says the company
does not roll out services on a build it and they will come strategy.
“We’re really launching it on an initial basis in one market, and we use
that as a way to become more familiar with the product and
requirements to support the product,” said Slater.
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