DSL Provider Covad Acquires Pre-WiMAX Operator

Landline broadband provider Covad Communications Group said Wednesday that it is acquiring a wireless ISP (WISP) and plans to enter the wireless broadband arena.

Covad said that it will acquire NextWeb, which has provided pre-WiMAX service for businesses in a number of California metropolitan areas and Las Vegas. Covad said in a statement that the value of the transaction is $24.7 million and that it expects to close the transaction by the end of the year.

By switching to wireless technologies, Covad said it believes it can reduce prices for its customers and control the service from end to end instead relying on incumbent telecommunications operators. As a so-called competitive service provider, Covad has been allowed to use the facilities of incumbent providers, primarily the Regional Bell Operating Companies (RBOCs). However, recent changes to federal telecommunications regulations now limit that access by competitive providers.

However, Covad said in a statement that it was not leaving the landline broadband business.