ITC^Deltacom Takes in BTIs Channel

Posted: 12/2003

ITC^Deltacom Takes in BTIs Channel

In finalizing its merger with BTI
Telecom Corp. in early October, ITC^DeltaCom Inc. not only has become one of
the Southeasts largest CLECs but it has embraced the agent channel.

Following the merger, ITC^DeltaCom has a fiber-optic network
spanning approximately 14,500 route miles and approximately 230 PoPs and offers
a suite of voice, data and Internet services including local, long distance,
data, broadband, colocation and Web hosting. The company operates approximately
30 voice switches and 70 data switches and maintains interconnection agreements
with BellSouth, Verizon, Southwestern Bell, CenturyTel and Sprint for resale and
access to unbundled network elements. It is a certified CLEC in Arkansas, Texas,
Virginia and all nine BellSouth states.

Larry Williams, chairman and CEO of the ITC^DeltaCom, says the
two companies worked for the previous three months to develop a roadmap for
integrating the two businesses. We remain confident the new ITC^DeltaCom will
be able to quickly realize the synergies created by the merger and bring added
benefits to our employees, customers, dealers and investors, he said in a
press statement at the time. The company anticipates that the merger will
generate annual cost savings of $40 million to $60 million.

From BTI, ITC^DeltaCom adds 800 employees to its 1,800, 20
branch offices to its 36 and 32,000 customers to its 20,000. It also adds an
entirely new distribution channel in the BTI dealer program.

Williams told PHONE+ that ITC^DeltaCom was exploring the
addition of a partner channel more than six months before the merger with BTI
was announced. We needed to get away from being exclusively a direct sales
force because there were a lot of markets that we couldnt serve as well with
that approach, he says, noting that in order to move down market to small and
midsize businesses, the company needed to increase its feet on the street.

Drew Walker, who now serves as president of business services
for the combined company, adds the acquiring BTIs program gives these plans a
significant jumpstart. One thing that I am thankful of is that we did not
have to start from scratch, he says. It was becoming obvious [from our
initial investigations] that to get a program with the credentials of a BTI
program, its not just selling products, its back office, its
automation, and BTI has a super program there. We surely are embracing it.

The addition of the dealer channel was so important to
ITC^DeltaComs plan that it signed a dealer agreement with BTI, enabling BTI
and its agents to sell the ITC^DeltaCom network before the merger was finalized.

The dealers, dont forget, are not exclusive, says Walker. If they have a T1 customer that wants to buy
service, they have a choice. They can go to BTI or they can go to one of the
other CLECs they represent. If we had not done [the agency agreement], there is
a certain amount of business that would have gone to a NewSouth or US LEC or
NuVox or whomever. He adds, that the strategy also enabled the channel to
become more familiar with the ITC^DeltaCom products and their availability in
areas that had not previously been served by BTI in Alabama, Mississippi and
Louisiana.

Formal dealer training was expected to be completed by
mid-November.

Roger Woodward, senior vice president of sales, oversees
direct and indirect channels. Three vice presidents handle the field sales force
while Robert Buffa and Jim LeBrec manage the dealers. The five already have met
with executives for strategic planning, Walker says. They are in competing
channels, but they are on the same team, Walker notes.

Nevertheless, there are no plans for channel integration,
although the direct sales reps use referral agents for lead generation, he says.

Currently, Buffa manages dealers across Georgia and Florida
while LeBrec has North and South Carolina and Tennessee. Both have growth
opportunities into the Alabama, Mississippi and Louisiana territory, Walker
says, adding the specifics have not been determined yet. We look forward to
leveraging [BTIs channel] success across the territory, he says. The
big questions are when is that going to happen, how fast and which markets?

In addition, ITC^DeltaCom, one of the countrys largest NEC
dealers, is planning to rollout a program to offer key systems and PBXs through
the dealer network. Details were expected by the end of the year.