Broadwing sells off broadband unit

Last week, carrier Broadwing announced plans to sell its three-year old broadband division, including its network, customers and support staff, to investment firm C III Communications for $129 million.

It became clear in January that big changes were underway at Broadwing. A portion of the company’s $2.5 billion debt is due this year and the remainder in 2004. Two months ago, Broadwing said it was exploring three options: debt restructuring, selling assets or bankruptcy.

While debt restructuring was believed to be the best route, it obviously wasn’t coming together for the carrier, hence the sale to C III. The investment firm has been acquiring telecommunications and cable network provider assets since its inception in 2002.

Although C III is buying Broadwing Communications “in place,” which means initially nothing changes in terms of service, network, customer support or number of employees, customers should try to protect themselves, says Lisa Pierce, an analyst at consulting firm Giga Information Group.

“Anytime the assets and customers are sold, the potential for severe disruption exists and enterprises should take precautions,” she says. Pierce points to MCI’s sale of its Internet backbone to Cable & Wireless in the late 1990s.

Although it seems that Broadwing will continue to support its national fiber-optic network and all of its customers, here are some suggestions that Pierce says users should consider:

*Get back-up providers in place now if Broadwing is your primary or a key secondary provider.

*Look at your contract terms and conditions. Are there clauses that allow for an early exit without penalty in the event of network performance, network availability, customer service/support deterioration?

*Do not agree to preferred provider status with the new parent company.  Do not extend the length of current contracts or increase financial commitments and reliance on them, until they have proven their competency.

C III is not a carrier and “must demonstrate its competency to win customer trust,” Pierce says.