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WorldCom Bids On Various Rhythms Assets
iamabot writes: "DSL providers are cheap these days. After the AT&T acquisition of NorthPoint assets for 135 million, WorldCom has issued a 40 million dollar bid for various assets of Rhythms. The interesting thing here is after some other providers disconnected their subscribers, WorldCom seem to be interested in operating the existing network. I suspect this will actually be a fairly cheap endeavor, when compared to the capital and recurring expenditures DSL providers faced over the past few years, especially for WorldCom. The majority of the cost associated with lighting up a DSL network nationally involves the capital expenditures to buy the equipment and the huge recurring monthly transport costs for central office aggregation to a node.
Does anyone else see the acquisitions in the past year or so as an opportunity for the DSL industry to rebound?"
> WorldCom said it will operate Rhythms' network
> assets in 31 markets and will have the right to
> use assets in 709 telephone companies' central
> offices and at Rhythms' Englewood, Colorado
> headquarters.
Sounds to me like they got a good deal. DSL is not a long-term solution to broadband access provision, so you might immediately think "why would anyone voluntarily lumber themselves with a soon-to-be-obsolete infrastructure?". But the right of access to all that existing CO plant is worth a lot more to them. They'll be grateful of it once they move beyond the limits of the current twisted pair local loop.
This theory seems more plausible for the fact that most (all?) of Rhythm's customers have already left the service. Usually when one service provider takes over from another they inherit some sort of customer base, goodwill etc... but in this case, there is little (none?).
In the meantime, they can probably make back most of that money by getting themselves organised and charging a sensible price for DSL. But I rather fear that too many customers have already got burned and will switch to cable, or wait for fibre, or even just wait to see what the market looks like in a years time (that's the attitute that *really* pisses off telcos!).
These sigs are more interesting tha
It won't be independent companies to rebound, it is going to be the telcos that do it. It is easier for them to do this because they don't have to be a middle man for the service, thus easier to make a profit and still be competitive to cable.
I don't think they are going to be that competitive though unless they start treating it like dialup and make it a whole cheaper compared to cable, considering the advantage cable has in speed already.
To me, Verizon (and SBC) is the Microsoft of the telecommunications business. I spent a few months this year dealing with a DSL fiasco. I'm not one of those people who gets upset about little things, but when they shut off my normal phone service and so forth, I began getting really pissed off.
Verizon (and SBC) have a government-granted monopoly on local phone service. The government says they're the only ones who are allowed to string telephone wire over and under our public streets. A condition of this monopoly which the government has granted, Verizon has to let DSL providers like Covad, Northpoint and Rhythms access to the central office and so forth. Verizon has been breaking the law and not meeting this obligation. In 1999 Covad filed an anti-trust suit against Verizon.
I had Covad as my DSL provider, Verizon is my local Baby Bell Local Exchange Carrier. For people who have ever had to deal with a T-1 which is down, you know how it is maddening as Verizon and Digex (or UUnet, or Sprint, or MCI) just point fingers at each other and say it's not their fault. I am somewhat familiar with central offices and the like so I was able to discern who was at fault in my case - and it was always Verizon's. When I called Verizon to complain that my phone line was dead or at other times that my DSL line was dead they had the gall to ask me why I wasn't using Verizon DSL. Covad kept making appointments to get into my CO but the Verizon people were always no-shows. Hell, they're a monopoly, why should they care.
Verizon is also one of the biggest political contributors in New York state politics, and one of the biggest contributors to national campaigns. This is how they get the government-granted right to be the only ones allowed to string telephone wire over and under our public streets. Once Covad, Northpoint and Rhythms are out of business, they can hike DSL rates up real high.
There is a GLUT of unused bandwidth out there, and even in this economy a demand for DSL. But government-granted mononopolies like Verizon/SBC prevent us the user/consumer from getting to that bandwidth. I keep getting advertisements in my phone bill for Verizon DSL, but I will never use them. I became so mad at Verizon, I did some political work on the campaign to keep them from doing long distance in Massachusetts.
Open up our phone lines to free competition. Get rid of the Verizon/SBC monopoly over phone lines over and under our public streets, which is granted by corrupt politicians who are paid off to maintain that license.
Rebound, maybe. But not a rebound to anything resembling what we had a year ago. If you look at what's happening, you've Big, Impersonal TelCos (AT&T, WorldCom) buying-up the assets. You can be sure they won't be re-selling to the smaller, more personalized ISPs. Choice will be limited and prices are sure to keep increasing. Maybe this is what's needed to make xDSL a viable business model, but the trend certainly won't be an improvement from a customer point-of-view.
Well, Rhythms was the best funded DLEC a few years back, they went through over 2 billion, much of that in capex for equipment, and recurring charges. Consider the recurring costs associated with over 1000 ds3 and half a dozen oc3 from the ILECs. The reason it's cheaper (comparitivelly) is WorldCom owns a significant amount of the existing transport network Rhythms is leasing.