US LEC Acquires StarNet

The acquisition, announced yesterday, gives the CLEC a national presence and gives the wholesale provider the backing of a large, public company.

by ISP-Planet Staff [November 12, 2004]

Palatine, Il.-based StarNet was acquired by Charlotte, N.C.-based US LEC, a CLEC, yesterday in deal worth $1.2 million in cash plus the assumption of unspecified liabilities.

Russ Intravartolo, CEO of StarNet, was enthusiastic about the deal. "We always wanted to have a telecom parent who believed in this space and in our service, and now we do. We continue to maintain nationwide coverage, so US LEC now has a coast to coast network. All those great things StarNet MegaPOP had before, we'll maintain."

StarNet had filed for Chapter 11 protection in 2002, and, as is the case in the ISP industry, had maintained service for several years while in bankruptcy protection. US LEC purchased StarNet out of the process in a procedure known as a Section 363 deal, for the rules governing the purchase of assets that are under bankruptcy protection.

Earlier this year, StarNet launched its VoiceEclipse service, providing VoIP to residential and business users, as well as an agent plan which provided recurring commission fees to ISPs and VARs who sold the service to business and residential users.

Right now, Intravartolo is busy working out the details of joining a new company—he's so busy that he doesn't even have a job title yet. He does know what his job will be, though. "I'll be running StarNet."

While US LEC focuses on providing services to businesses, StarNet, as a wholesale provider to ISPs, has a different focus. But Intravartolo minimizes the differences. "Our customers are businesses who sell to end users. That's not very far off from US LEC's strengths and core services. We still deal with businesses, even though those businesses have retail subscribers."

In a statement, Aaron Cowell, president and CEO for US LEC, was also enthusiastic about the acquisition. "As one of StarNet's largest vendors, we will leverage our familiarity with their organization, in addition to our experience assimilating Fastnet's data assets, to make this an ideal integration opportunity. The resulting combination will raise the quality of these Internet services to standards that competitors will be hard pressed to meet," he said.

In summary, Intravartolo has a simple message for ISP customers. "Our ISP customers will see StarNet with a new power behind it. Our network is going to get bigger and better. We're committed to this space."

— End