WinStar wins out with ISP purchase: CLEC gets GoodNet, gains national data network

WinStar Communications, a competitive local exchange carrier with about 300 business subscribers, purchased Internet service provider GoodNet last week for $22.5 million. The acquisition brings WinStar up to speed in the booming data networking arena and gives GoodNet a toehold in the wireless local loop business.

The new WinStar will leverage GoodNet's network to offer voice, data and video services as well as Internet and information services. The company expects an additional $4 million in revenue for 1998.

To expedite data networking offerings, the company also has established a new business division, WinStar Broadband Services. GoodNet will be renamed WinStar GoodNet.

A major holder of 38 GHz licenses, WinStar will continue to focus primarily on its wireless fiber local loop connectivity. The wireless data market is expected to grow 15% in 1998.

"We hope the majority of our local loop business is wireless," said Howard Taylor, president and chief operating officer of WinStar Broadband Services. "However, we will use traditional technologies if necessary."

GoodNet's meshed asynchronous transfer mode backbone serves 27 U.S. cities. "We had plenty of customers before, but we did not have national ATM connectivity," said Taylor. "GoodNet is a great footprint for us."

The network uses Newbridge switches, 3Com ATM access products and Cisco routers. It offers fractional DS-3 and OC-3 (155.52 Mb/s) trunks to its network operations centers.

GoodNet views the deal as a way to gain more subscribers. "Business customers are looking for alternatives to the CLECs they know today," said David Jemmett, president and chief operating officer at

GoodNet. "The market penetration of the Internet is about 20%. There's 80% left to get." The CLEC will offer improved value-added services such as LAN and WAN management, configuration and customer support.

One analyst said the move is in the right direction for WinStar.

"Until now, WinStar has focused on traditional voice services," said Mike Smith of Probe Research in Cedar Knolls, N.J. "This acquisition positions the company as a more comprehensive service provider and expands their services."