SEATTLE and SAN JOSE, Calif., and COSTA MESA, Calif. -- Speakeasy, a Best Buy company (NYSE:BBY), has entered into an agreement to combine its business with Covad Communications Company and MegaPath Inc. in a deal that will create the first managed services local exchange carrier (MSLEC) able to provide a full range of IP voice, security, VPN and Internet services nationwide. The transaction is expected to close in the third quarter of 2010, contingent upon closing of the previously announced transaction between MegaPath and Covad. Financial terms will not be disclosed.

This transaction will combine Speakeasy’s market-leading small business voice and data services with MegaPath’s wide selection of products and value-added services for distributed enterprises, and make them available over Covad’s intelligent, nationwide broadband network.

“The combination of Covad, MegaPath and Speakeasy will create the next-generation CLEC – an MSLEC that can offer customers and partners a full suite of managed IP broadband services and access over a powerful national network,” said D. Craig Young, MegaPath CEO. “With the additional resources, mature channels and enhancements to the service portfolio, we expect the combined companies to extend their leadership position in the SMB, enterprise and wholesale markets.”

Speakeasy Inc.

Covad Communications Inc.

MegaPath Inc.