Vocus buys ailing Australian fibre network

Digital River acquisition won’t cause wholesale / retail conflict

Troubled dark fibre provider Digital River has been acquired by Vocus Communications, giving the Australian wholesaler nearly 60 Km of operational fibre in Sydney and Melbourne at the bargain-basement price of A$3.95 million.

Digital River was founded in 2001 to build a network serving Melbourne CBD premises, and later expanded to Sydney. The company has struggled to succeed, and last year suffered a rash of management changes reaching all the way to the CEO.

Announcing the acquisition, Vocus CEO James Spenceley said his company would be able to add metro fibre services to its existing data centre and IP transit products. The acquisition, he said, fits into Vocus’ strategy to “become the leading infrastructure provider to the teclo, cloud computing and retail ISP markets”.

In absorbing the acquisition, Vocus will have to avoid the perception of creating a wholesale / retail conflict. Such concerns have been raised in previous acquisitions in the Australian market. For example, the purchase in 2009 of dark fibre wholesaler Pipe Networks by retail ISP TPG was criticized by some Pipe customers fearful that they would be competing with their dark fibre supplier.

Spenceley told El Reg he believes he can avoid such problems. “A large percentage of Digital River’s fibre and Ethernet customers are wholesale clients, so there isn’t much clash,” he said in an e-mail.

While Digital River offered other retail and business services, Spenceley said Vocus expects to migrate these to its retail customers, so that in future, his company will be able to focus on offering wholesale services only. ®