Covad, GoBeam in VoIP Play

Broadband Internet service provider Covad Communications is strengthening its commitment to offering phone calls over the Internet — known as voice over IP — with an acquisition.

The San Jose, Calif.-based company Wednesday said its will purchase privately owned GoBeam for $48 million in stock. Pending regulatory approval, the deal should be completed in May of this year. In a statement, Covad warned that the accelerated roll out of its VoIP (define) services would have an impact that has yet to be evaluated on the company’s cash flow.

Pleasanton, Calif.-based GoBeam has some 13,000 VoIP units currently installed with customers across California and Chicago. Much like Covad, GoBeam is focused on small- and medium-sized businesses and had been in the communications services with a software based development platform since 1999. Among GoBeam’s product offerings is a full-feature hosted PBX (define) solution and a VoIP Dashboard utility that integrates and consolidates services and features into a simplified desktop.

The move is part of a repositioning of Covad from being just a broadband company into an integrated voice and data communications provider. VoIP services are delivered via high-speed broadband bandwidth, so the move is a logical extension for Covad’s delivery system. Earlier this month Covad announced a plan to roll out VoIP services to its customers in four markets by October of this year. At that time, Covad referred to broadband telephony as a “natural extension” of its infrastructure.

“By combining Covad’s nationwide broadband network with GoBeam’s market-leading VoIP services we expect to greatly accelerate the national availability of VoIP and communications services bundles eventually reaching more than 100 of the top Metropolitan Statistical Areas in 35 states.” Charles Hoffman, Covad president and CEO said in a statement.

The investment in GoBeam is both a short and long-term investment for Covad. VoIP growth is expected to explode in the next few years. According to statistics from Forrester Research, VoIP’s Internet Protocol-PBX will continue to grow through 2007 to 1.7 million lines from 100,000 lines today. Similarly, a report from research firm Stratecast Partners, by 2007 the U.S. VoIP market is forecast to grow to more than five million subscribers, a five-fold increase over 2002 levels.

Adapted from

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