Mobile

Commentary: Deal could lead to nationwide DSL coverage

After its latest deal closes, Verizon Communications will come close to becoming a nationwide provider of digital subscriber line service to businesses and consumers.

By Jay Pultz, Gartner Analyst

After its latest deal closes, Verizon Communications will come close to becoming a nationwide provider of digital subscriber line (DSL) service to businesses and consumers.

The term "come close" is used because the deal with NorthPoint Communications has an unusual structure.

Verizon will pay NorthPoint $800 million

See news story:
NorthPoint, Verizon form broadband venture
in cash and stock and will merge its own DSL assets into NorthPoint's. NorthPoint will continue to operate independently under its present chief executive. Verizon, however, will own a controlling interest. Therefore, Verizon will have a controlling interest but not direct control over day-to-day operations and long-term strategy.

The deal could affect NorthPoint's business model. NorthPoint provides DSL service primarily as a wholesaler and principally relies on Internet service providers (ISPs) and resellers to reach consumers and businesses.

Gartner believes that Verizon will become the nationwide point of contact for selling NorthPoint DSL service to businesses. If NorthPoint's present resellers believe that they are competing with Verizon, they may be reluctant to continue their partnerships.

NorthPoint and Verizon together will serve the 100 largest metropolitan areas in the United States, so this deal will give Verizon a national DSL footprint. DSL that covers the nation will benefit businesses, especially because they can go to one service provider to buy broadband Internet access for workers located in homes and remote offices around the country.

Gartner believes that this trend will continue--possibly with the acquisition of the two other significant national DSL providers, Covad Communications and RhythmsNetConnections, by large telecommunications firms or national ISPs.

(For related commentary on what DSL services offer and what they could cost, see TechRepublic.com--free registration required.)

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