EarthLink Chosen to Build Houston Wi-Fi Network

Source: EarthLink Press Release

Mayor Bill White today announced that EarthLink (Nasdaq:ELNK) has been chosen by the City of Houston to build a citywide wireless broadband network, pending contract negotiations.  The selection comes following the review of five companies that submitted proposals.  EarthLink’s experience in developing systems for other cities and its plan to finance the network on the equity of its available cash reserves figured prominently in the selection.

The Wi-Fi mesh network will provide affordable, high-speed Internet access for residents of and visitors to Houston.  It will also enable municipal employees to work in the field without having to return to an office to use traditional landlines to complete their tasks.

Houston’s 600-square-mile service area will make this Wi-Fi deployment the largest in North America.

"This is a very important initiative for Houston as it will bring the consumer cost of broadband down significantly and already has," said Mayor White.  "It will provide a scarce resource to help our low-income households have access, benefiting students at home, helping telecommuters for whom childcare or transportation creates limitations, and benefiting telemedicine in the future.  Houston’s workforce will be more productive."

"Mayor White has made his goals for wireless broadband pretty clear: make City Hall more efficient and responsive and improve both the City’s business climate and residents’ quality of life," said Donald Berryman, EarthLink Executive Vice President and President of the Municipal Networks Unit.  "Our Wi-Fi networks give consumers an affordable and portable broadband Internet connection anytime, or any place, throughout the City.  We will also offer a fixed wireless solution that when compared to existing landline offerings, is faster to install and much more cost effective."

EarthLink has major initiatives under way in Philadelphia, New Orleans, Alexandria, Va., and Milpitas and Anaheim, California.  The company is also finalizing agreements with the cities of Pasadena and San Francisco, California.  These initiatives clearly indicate EarthLink has an experience advantage over the other companies that provided proposals.  Additional criterion for the project included value to the community (including soundness of the financial plan, low-income inclusion investments and wholesale rates), deployment strategy and value to city government.  City Officials spent five months evaluating the firms.

EarthLink agreed to offer a very competitive wholesale rate capped for at least the first seven years.  For up to 40,000 low-income users, EarthLink will provide a discounted rate of $10 per month or lower, depending on the competitive wholesale rate.

As part of its commitment to open access, EarthLink will enable multiple providers, such as PeoplePC, Vonage and DirecTV to offer their Internet service to consumers and businesses over its network. For small businesses, Houston’s wireless network will also provide an alternative for broadband connectivity, such as affordable fixed wireless solutions.

EarthLink to Acquire New Edge Networks

Source: New Edge Networks Press Release

EarthLink (Nasdaq:ELNK) today announced the execution of a definitive agreement to acquire New Edge Networks, a privately-held single-source national provider of private Virtual Private Networks (VPNs) and secure multi-site managed data networks and dedicated access for businesses and communications carriers.

The acquisition of New Edge Networks will enable EarthLink to easily and quickly expand its business in the fast growing small and medium business market.  The Vancouver, Wash.-based company will give EarthLink one of the largest data communications networks in the country and a customer base that is expected to generate approximately $120 million in revenues in 2005. 

Together, EarthLink and New Edge Networks will be able to package their voice, data, protection, and security tools to meet the rapidly growing demand for high-speed access and VPN services by both small office and home office (SOHO) users as well as small and medium enterprise (SME) customers. 

“New Edge Networks is a tremendous growth platform for EarthLink to compete in the rapidly expanding SME networking market,” said Bill Heys, president of EarthLink’s value and small to medium enterprises business unit. “This acquisition builds upon our existing suite of award-winning services for small businesses and gives New Edge Networks the added resources to strengthen its market position.” 

“When we bring together EarthLink’s financial resources and reputation for outstanding customer service with our national network and proven track record of performance, we will be uniquely positioned for serving our customers and tapping the growing market for business networks,” said Dan Moffat, president and CEO of New Edge Networks. “We believe this transaction benefits customers, investors, and employees of both companies.” 

Under the terms of the agreement, EarthLink will acquire 100 percent of New Edge Networks in a merger transaction for approximately $144 million, consisting of 2.6 million shares of EarthLink common stock and $114.3 million in cash, including cash to be used to satisfy certain liabilities.  The acquisition, which is subject to regulatory approvals and customary closing conditions, is expected to close in the first quarter of 2006. 

EarthLink plans to retain New Edge Networks’ 345 employees and the New Edge Networks brand and operate the company as a wholly-owned subsidiary of EarthLink. New Edge Networks will continue to be based in Vancouver, Wash. With more than 20 years in the telecommunications industry, Dan Moffat will remain as president of New Edge Networks after the acquisition is completed.