DSL.net Evolves Despite Brutal Conditions

In a brutal market, DSL.net‘s strategy is pure Darwin — adapting to survive while amassing the
customers and equipment from those who don’t.

This morning, the New Haven, Conn., broadband provider ponied up $17 million (cash and assumed debt) for Network Access Solutions of Herndon, Va.

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 ) 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,” Joe Tomkowicz, a DSL.net spokesman told

DSL.net, whose offerings for residential and small business customers include digital subscriber line (DSL), T1, and virtual private network (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 nearly 1,100 business and residential customers from

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.

DSL.net’s moves high-speed Internet providers have gone out of business or filed for bankruptcy protection.

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 Web site).

However, quarterly growth rates have fallen significantly between 2001 and 2002, and providers must find new ways to woo users not that the early-adopters have already bought in.

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