According to the company, owning and operating its own switches lowers its costs and gives it greater control over service quality. Minneapolis, Minnesota-based Eschelon said approximately 45% of its access lines are delivered through T1 circuits, which allow it to deliver multiple voice and data services over a single connection.
Eschelon believes the potential is huge. It quotes an estimate by researchers IDC that the telecommunications services spending by the small and medium-sized businesses was $47bn in 2004. While the market is dominated by the Baby Bells, the Federal Communications Commission estimates that competitive communications services providers served 32 million, or 17.8%, of end-user access lines, an increase of 19% over the prior year.
The company argues that the Baby Bells have historically neglected the small and medium-sized business segment because it is too fragmented and localized, and it views this segment as a key growth opportunity.
Eshelon is planning to expand by acquisition. In October 2004, it paid $45.5m for Advanced TelCom, which had 18,000 customers in California, Nevada, Oregon and Washington, and was the company’s seventh acquisition. It said its targeted acquisition strategy will allow it to penetrate further into its current markets and to expand into adjacent markets.
