DSL providers' bloodbath continues
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A trio of competitive DSL providers last week announced plans to scale back their operations, the latest setbacks for a market that increasingly looks as though it will be dominated by the Bell companies.
The bad news for competitive DSL firms included:
- HarvardNet, which operates in the Northeast and Mid-Atlantic regions, revealed that it will cut about 280 employees - more than half of its staff - and exit the DSL business. The company now plans to concentrate on Web hosting and managed services.
- NorthPoint, which had its intended merger with Verizon scrapped by the incumbent local exchange carrier two weeks ago, announced it would lay off 248 workers - about 19% of its workforce.
- Two weeks ago Covad Communications announced that it was cutting 400 positions and halting its network expansion at 2,000 central offices.
- Zyan, a Los Angeles firm, filed for Chapter 11 bankruptcy protection and is laying off about 160 of its 230 employees.
A difficult environment
Mark Washburn, HarvardNet's CEO, says building out DSL networks and maintaining ongoing DSL operations is proving to be too capital intensive at a time when funding is drying up, and DSL stocks are getting hammered on Wall Street.
"It's a very difficult environment to operate in right now," he says.
The three biggest competitive DSL providers - NorthPoint, Covad and Rhythms - have seen their stock prices fall precipitously over the course of 2000. As of 3 p.m. last Thursday, not one of their stocks was worth more than $2.
Washburn notes that Rhythms, which has the most cash on hand of any DSL provider, is about the only major provider not to announce job cuts or a scaling back of operations.
HarvardNet is working to transition its several thousand customers to other DSL providers, Washburn says. The company was still working on the transition plan's details at press time.
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