What About Xspedius Agents?

In late July, Xspedius Communications LLC became the latest CLEC to be absorbed by merger. Xspedius agents have expressed concern that its acquirer, Time Warner Telecom Inc., will not value their contribution to the merged company a common fear among agents in the consolidating marketplace.

As a top Xspedius agent, we view this announcement with mixed feelings, says Adam Edwards, CEO for master agency Telarus Inc. We are excited by the prospect of selling Time Warner [Telecom] products and delving into new markets. We are also concerned, however, that Time Warner may not see the tremendous strength of the Xspedius agent program.

Edwards says Time Warner Telecom executives should adopt the Xspedius partner program and personnel as its foundation for future growth. I fear however, that Time Warner may take a not invented here attitude as do many large companies and try to force Xspedius agents into its fledgling program, which I understand is a referral program, not an agent program, he says.

Agents commenting on the PHONE+ Web site expressed a similar understanding of the program. One master agent was concerned that Time Warner Telecom might force Xspedius agents into the Time Warner [Telecom] model. If that happens, the agent said, It will force us agents to utilize other carriers with the markets served. Should the decision go the other way, however, the agent noted it was looking forward to being able to sell services across the expanded footprint.

A third agent wrote it hoped Time Warner Telecom would nurture the Xspedius program and not try and fix something that is already very successful. All agents that commented on the PHONE+ Web site reported being very satisfied with the Xspedius program and service levels. The Xspedius channel has been extremely helpful to their agents and ultra-sensitive to the needs of their agent’s clients. This sensitivity shows in the customers satisfaction as well as the channel growth over the years, one agent wrote.

Dale Bohannon, president of Collaborative Communications Ltd., an Xspedius agent, notes the value of the agent channel in a consolidating market. I can only hope that [Time Warner Telecom] sees the value of agents, and their ability to bring in steady long-term business. I think smaller providers like XO, [Time Warner Telecom] and Xspedius are going to need to bring every sales resource to the table they can to compete against Verizon Communications Inc. and AT&T Inc.

Bohannon says there is a significant need for agents in the business midmarket, and there is sure to be an agent-friendly carrier waiting in the wings should any drastic changes occur within the existing Xspedius structure.

Xspedius representatives did not respond to requests for comment.

However, Bob Meldrum, senior director of corporate marketing and communications for Time Warner Telecom, told PHONE+ its too early to discuss what the combined company will do. We each have a channel strategy and, in our case, it involves direct sales, strategic marketing partners, joint channel partners and authorized representatives that efficiently focus on different customer segments. Part of the transition is to identify and launch best practices that will capture additional market share and deliver excellent customer support.

Meldrum added, Until we close this transaction, it will be business as usual. In the markets where we overlap (12), we will continue to compete for services and business.

Closing is expected within six months, and is subject to customary conditions, including the receipt of applicable federal and state regulatory approvals. The transaction has been approved by the required majority consent of equity holders of Xspedius Communications and does not require a Time Warner Telecom shareholder vote. Under the terms of the agreement, Time Warner Telecom will pay $531.5 million $212.5 million in cash and $319 million in shares of Time Warner Telecoms Class A Common Stock. The company will assume no debt in the acquisition.

Xspedius provides metro Ethernet, local and long-distance voice, data and dedicated Internet access services in 43 markets across 18 states and the District of Columbia.

Time Warner Telecom provides managed network services, specializing in Ethernet and transport data networking, Internet access, local and long-distance voice, VoIP and security in 44 markets. Together the companies cover 75 markets.