MegaPath, Telocity Join Forces

MegaPath Networks and Telocity joined forces Wednesday with an exclusive arrangement to refer potential customers to one another.

It’s a sign of the times, as digital subscriber line providers who don’t adapt to demanding market pressures are quickly brought down by the market they serve.

Under the arrangement, MegaPath passes residential DSL leads to Telocity, who also transfers any potential business customers back to MegaPath. Web sites from both companies will promote the other’s business or residential services, while customer support staff from both sides will transfer calls to the other.

The two are ideally suited to cross-promoting the others’ services. MegaPath has focused its energies and marketing efforts to the small and medium business customers, while Telocity has gone after the residential market.

The deal also significantly extends its service into new markets and provides deeper penetration into major cities.

Telocity has a footprint that covers more than 140 metropolitan statistical areas (major cities and their suburbs) throughout the country. While it only expects to have DSL service in 50 MSA’s by the end of the year, MegaPath has a reseller’s agreement with New Edge Networks.

New Edge serves rural and underserved cities throughout the U.S., most with no high-speed options outside of network-sharing cable Internet and expensive telco services. The potential for big sales in these tier 3 communities make the agreement especially pleasant, as both consumers and businesses are looking for another alternative.

J. Dan Foster, MegaPath senior vice president of marketing and sales, said that while the agreement can end at any time, the support structures in place at both companies makes it unlikely to happen.

“At the end of the day, you need to provide support that meets the requirements of your customers,” Foster said. “We’ve designed a customer support structure that is ideally suited to our business customers. It would never work well with residential customers.

“In our main office, all of our employees are connected with a DSL line,” Foster continued. “We know how to resolve those types of problems. You get a lot of the online gamers who use a residential DSL line, and after playing a game of Quake, they’ll complain they got a high ping (spike) while playing. Our support architecture doesn’t support that, but Telocity does.”

Both enjoy a reputation as company’s committed to customer support, a sharp contrast to the poor support services found at other broadband ISPs lately.

MegaPath and Telocity officials take pride in the fact they are two of only four broadband ISPs recommended by DSL consumer forum, a position they’ve maintained for nearly a year. MegaPath was recently taken down after a spate of residential complaints associated with its PhoenixDSL acquisition in October.

Like the dial up ISP consolidation a couple years ago, broadband ISPs are finding out that while its relatively inexpensive to start up a high-speed service offering, its another thing entirely to hang on to the company.

Four ISPs recently filed for federal bankruptcy protection Tuesday after failing to pay for the DSL lines it ordered from companies like Covad Communications Group, NorthPoint Communications and Rhythms Netconnections.

Foster said news like this is just proof that broadband ISPs need to consolidate in order to survive.

“There’s got to be some consolidation in the DSL industry,” Foster said. “There are more than 800 DSL providers in the United States, which makes the market very competitive. There’s no barrier to entry (in the DSL industry), but there’s a huge barrier to scaling their operations. So it’s inevitable to see some of the

m go out of business.”

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