In the spotlight: MegaPath’s Greg Davis
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Three months after Netifice and MegaPath merged, creating the new MegaPath as a national provider of managed IP services, the company said this week it is making an equity investment in DSL.net, a broadband service provider operating out of 350 collocation spots in 12 New England and Mid-Atlantic states. The acquisition is a bit of a departure for MegaPath as DSL.net operates its own DSLAMs, taking the managed service provider into the facilities-based business. Editor-at-Large Carol Wilson spoke with Greg Davis, vice president of marketing for MegaPath, on the pending acquisition.
On the benefit to MegaPath if the deal goes through as planned: We’ll be able to leverage their DSLAMS to service customers within their footprint. We have a lot of customers in that area already that we would migrate to their DSLAMs. That would not only lower our costs and improve our margins but give us more control over the quality of the service we are delivering to them.
That is one step. In those markets where they have those DSLAMS, we are able to deliver the same service they have today, which is a voice service, over SDSL and T-1 lines. I hesitate to call it VoIP because technically it is coming right over a [private virtual circuit] over an ATM network. It is a very good quality way of doing it.
So we are able to offer the voice service they do today. We would look to leverage that VoIP infrastructure that they have to offer services in other markets. We currently have an IP telephony service that we offer. This would give us more engineering skill sets and also expand into that product area.
We used to resell DSL.net’s service. We have a bunch of customers that are on their network, but resold through us. This enables us to take them direct. That doesn’t expand our footprint per se. It gives us better margins on those customers that are in that situation, and it also gives us better control over service delivery and service quality. We’ll have our own field tech services, our own engineers running the DSLAMs, doing on-site installation, and our own NOC having visibility of the service all the way to the customer.
On bringing facilities management into the managed service business:
We were definitely a managed service provider focused on wide area VPNs for enterprise customers. DSL.net is more of traditional DSL access provider. They really went after single site kind of small businesses as opposed to multi-site customers. Yes, we will move down market. That was one of the strategic reasons for the [Netifice] acquisition of MegaPath, the majority of their business is also small to medium-sized businesses. If you look at their customer base, the majority is still SMBs. We were able to marry the inside distribution model with the agents and partners that MegaPath brought. We are now taking [the managed services] to more customers, putting more sales and marketing muscle behind it. We have a pretty big agent program, a large inside sales force with lots of lead generation and referral partners for going after that single-site medium-sized business market.
On combining large and small markets: We plan to keep doing both. We are not going to stop doing the enterprise stuff. It is a growth path for us. And also, I think that there are more higher margins in that [SMB] space because you are able to charge a higher price on a per-site basis than you are in a large corporate deal. The large corporate deals are a bigger hit every time.
The other advantage is that when you have lots of small to medium-sized customers, it smoothes out provisioning cycles and is a good complement to corporate business. Especially if you are going after verticals that are seasonal, like retail customers, who don’t touch anything during the Christmas time period, it gives you a more consistent revenue stream.
On adding more DSLAM facilities. That is something we are looking at DSL.net does have DSLAMs they have decommissioned over the years and we could re-deploy those. If we do it, it would be on a market-by-market success-based model. We would decide market by market if it makes sense to put our own facilities there. We haven’t finalized that decision.
On future acquisitions: Our CEO has said a number of times we aim to grow the company through both acquisitions and organic growth. I can’t address any near-term deals in the works.
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