Consolidation in the US competitive carrier space is so common, it sometimes escapes notice when a merger is about more than just the consolidation of two businesses.
That is certainly the case with Global Capacity's recent purchase of the MegaPath network services business, an acquisition that closed Tuesday. (See Global Capacity Completes MegaPath's Network Services Buy and MegaPath Sells Networks to Focus on Services.)
With the deal now completed, Global Capacity has added Layer 3 services to its portfolio, giving a company best known for wholesale interconnection a better direct path to the enterprise market.
As importantly, Global Capacity can now combine MegaPath Inc. 's automated back-office operations -- a system developed originally by Covad Communications -- with its own automated front-end, the One Marketplace platform that enables carriers to buy and sell access lines on a highly automated basis.
"Global Capacity developed market-leading and very disruptive technology around how you design and price multi-location, multi-variable networks," Global Capacity President Jack Lodge tells Light Reading. "Where we lacked automation was in [the] back office -- in order execution, provisioning, through to billing -- and this provides us with what we think is one of the most automated engines available."
The Covad system was developed to enable its wholesale customers to order via a portal and then automate the process of not only provisioning internal resources, but also tying in the third-party provisioning systems of its partners. It was a landmark development in the early 2000s, and was improved over the years with the addition of features such as Netcracker's inventory management system. (See Speakeasy, MegaPath & Covad Merge, Covad Uses NetCracker OSS and MegaPath Still on Growth Path.)
Combining the front-end automation of the One Marketplace with the back-end MegaPath system will let Global Capacity grow and scale its business more rapidly and efficiently, Lodge says. MegaPath and Global Capacity were already doing business together, so there is an API connection between One Marketplace and the MegaPath back-end system, but the broader integration will take place over the next year, Lodge says.
Priority one in the post-merger period is to make sure all existing customers are happy and unaffected by the merger, says Ben Edmond, chief revenue officer for Global Capacity. But immediately on the heels of that process will be efforts to leverage MegaPath's portfolio of data connectivity products, including direct Internet access and MPLS-based services, to more directly target enterprise customers and grow that part of Global Capacity's business.
That does put Global Capacity into more direct competition with the carrier and applications service provider customers it targets on the wholesale side, but that's nothing new, Edmond says. "It's part of the co-opetition model that has been part of this market for a long time now," he comments.
"Our strategy going forward hasn't changed," Edmond adds. "When you look at the core principles of our growth, they are around the shift in the application architecture to the cloud, and whether you call it cloud or third-party data center or hosting provide, that is moving the apps away from the user, making the network more important in the user experience."
Through acquisition of MegaPath's Ethernet-over-copper network and its inventory of access lines, Global Capacity is better positioned with direct interconnection into more locations where those applications reside and also into the end-users themselves, he says.
— Carol Wilson, Editor-at-Large, Light Reading