DSL.net Buys Network Access Solutions

The New Haven, Conn., broadband provider's strategy is Darwinian—adapt to survive while amassing customers and equipment from those who don't.

by Colin C. Haley boston.internet.com Managing Editor [October 18, 2002]

Broadband provider DSL.net of New Haven, Conn. ponied up $17 million (cash and assumed debt) for Herndon, Va-based Network Access Solutions.

NAS has everything DSL.net looks for in an acquisition: a strong customer base (13,000 business subscribers), a busy geographic market (Virginia to Massachusetts), good technical facilities (300 central offices (COs)), and a balance sheet written in red ink (NAS filed for Chapter 11 bankruptcy protection in June).

"Our strategy has been a dual track—adding to our internal sales force and looking for apportunistic acquisitions," said Joe Tomkowicz, a DSL.net spokesman.

DSL.net, whose offerings for residential and small business customers include DSL, T-1 lines, and virtual private networks (VPNs), has declared itself an "industry consolidator."

In February, it acquired Broadslate Networks, of Charlottesville, Va., netting customers in Florida, Tennessee, Virginia, North Carolina, and Pennsylvania.

Then in August, DSL.net gained 78,000 business and residential customers from Aplus.net.

Tomkowicz said the DSL.net is in a position to make savvy buys because it made difficult decisions to cut staff and unprofitable COs last year. That, along with the infusion of $15 million in new financing, gave the company a war chest to buy failing rivals.

The growth of broadband in the United States continues and will hit 15.4 million households by year's end, according to new figures from Jupiterresearch (which is owned by the same parent company as this website).

However, quarterly growth rates have fallen significantly between 2001 and 2002, and providers must find new ways to woo users now that the early-adopters have already bought in.

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