Two of the region's largest wireless Internet service providers have joined forces.

Frederick-based Mesa Networks and Berthoud-based LP Broadband have merged to form Skybeam. The companies say the merger will help them to compete against the industry giants that capture most of the Internet service market.

Mesa Networks is the senior of the two companies, founded in 2000 to focus on reaching underserved markets around Northern Colorado. Mesa has grown aggressively - both organically and through acquisition - and has ranked among the fastest-growing companies in the region and the country.

In 2006, the company ranked as the fifth fastest-growing private company in Northern Colorado on the Northern Colorado Business Report's Mercury 100 list. In 2007, Mesa landed at No. 795 on Inc. magazine's Inc. 5000 list.

"We've known the LP guys since before they started," said Mesa CEO Todd Bergstrom.

LP was founded in 2003 by a group of former Hewlett Packard and Agilent Technologies employees. The company grew its customer base quickly - absorbing smaller companies much like Mesa. In fact, one of its 2006 acquisitions was of Skybeam.net Inc. - a provider that serviced about 400 customers in northwest Fort Collins and around Carter Lake in Loveland.

The merger is one of near-equals, based on client accounts. In 2007, the companies ranked No. 4 and No. 5 on the Business Report's local Internet service providers list. LP had about 6,200 customers to Mesa's 7,200. Skybeam now serves a client base that extends from the area surrounding Colorado Springs, north along the Front Range, up to Cheyenne, Wyo.

"It was a very friendly relationship before the merger," said Scott Perich, general manager of LP.

The companies did not have any formal ties, but were in the habit of referring customers to each other. Executives would meet to discuss industry happenings monthly or quarterly.

Although the companies were friendly, they were also competitive. LP provided service from around north Longmont to Cheyenne, while Mesa's network reached south to Colorado Springs, but its early market included Northern Colorado as well.

"There was definitely some overlap," Perich said.

The overlap will not result in any staffing changes for Skybeam. LP and Mesa retained all of the employees who were interested in continuing, but Skybeam's call center will be at the LP site in Berthoud. Some Mesa employees decided that the commute would not work for them, Bergstrom explained.

"Not only did we not cut back, we've continued to hire," Perich said. Since the companies began the merger process in May, Skybeam has added about a dozen new employees. Now, the company employs about 70.

Helping to ease the pain of merging two organizations is the fact that LP and Mesa were using the same technology platform. Yet to be worked out, however, is the different Internet protocol architecture. Both Perich and Bergstrom said that merging two firms can be difficult but they feel there will be little interruption for customers.

Perich said the most important element easing the merger is the similarity between the companies' cultures and philosophy - the goal being to provide a desirable alternative to Internet service from Qwest or Comcast.

"We believe broadband Internet is very important to the economy, and you should have more than two choices for it," Bergstrom said.

By joining together, the companies plan to implement the best practices and technologies to make Skybeam more competitive.

"We're able to take the best of both companies and go forward," Bergstrom said.

 For example, Mesa was having difficulty offering residential Voice over IP solutions, where LP was already seeing success with its own program, while Mesa brought with it a larger footprint and more diverse customer group.

"Mesa had put a lot of their focus in the last year or so into businesses (customers)," Perich said. "We want to continue to expand on what they were doing."

Skybeam will move forward by concentrating on upgrading technology and filling in the service gaps. The sweet spot for both LP and Mesa has been service in areas where either Comcast or Qwest, or both, were not available.

"It's difficult," Bergstrom said of the Internet service provider industry. "You're competing against billion dollar companies."

According to a Hoover's industry analysis, the U.S. Internet services industry has about 4,000 companies pulling in $30 billion in revenue. However, the 50 largest companies capture 80 percent of the marketplace.

"You get a little more horsepower by bringing the companies together," Perich explained.



Kristen Tatti covers technology for the Northern Colorado Business Report. She can be reached at 970-221-5400, ext. 219 or ktatti@ncbr.com.