WorldCom Bids On Various Rhythms Assets 76
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?"
I don't think so... (Score:2, Informative)
Re:Clarification. (Score:3, Informative)
Most DSL providers have one POP in a region and the backhaul all the DSL traffic from the DSLAMS colo'ed in the telco central office to that POP over the telco's ATM network. The Telco loves to build SONET rings over already existing fiber because it doesn't cost them anything 'cept the cards in the OC-192 mux.
Most DSL providers start with DS-3 (45mbps) ATM SONET rings in a LATA. You need a lot of DSL subscribers to pay for that ring every month and only a 1/10th of that to fill it. Moving up in speed to OC-3,OC-12,OC-48,OC-192 gets very expensive.
Stopping the SPAM (Score:2, Informative)
-Chris
Re:Stopping the SPAM (Score:1)
Re:Stopping the SPAM (Score:1, Funny)
Ameritech: I'm calling to tell you about our high-speed DSL internet connection that...
Me: I already have Ameritech DSL. Why are you calling me?
Ameritech: Oh. I'm sorry. So, how do you like it?
Me: Well, I was really displeased with the 50 days it took you to get it installed.
Ameritech: Oh.
Me: And I didn't appreciate having to call your technicians back 4 times for them to get the connection working correctly.
Ameritech: Oh. Well..
Me: And I didn't appreciate that when each technician (or should I say subcontractor, since nobody at your company actually does any of the work) was told to fix the wrong thing. It even got completely disconnected once during the whole fiasco.
Ameritech: Oh, well I...
Me: But other than you wasting my time, being incompetent, and furthering a monopoly, it's been a real dream. It works pretty well.
Ameritech: Sir, I'm very sorry that...
...click... I hung up at that point.
Me: Jerk ass!
-D
Roller Coaster price-ride of the high tech arena (Score:1)
Things that are happening right now is mere part of the roller coaster ride. It's just that in the high-tech arena, the price changes got a bit too exaggerated - that is, either it's too high, or too low.
For those who got extra Greenbacks in their pockets now, there are plenty of bargain to be had.
These rock-bottom priced bargains will one day become high price again.
Count on it.
Re:Roller Coaster price-ride of the high tech aren (Score:1)
That's, unfortunately, what I'm worried about! I fear that once the economy gets better and the dust clears, we'll see DSL monopolies in some areas...especially areas further from the cities. It's a good thing that 1.) cable[modem] is widely available and 2.) Competition can actually happen with DSL, unlike the way local phone service works...
Charge more. (Score:1)
The DSL industry must charge more for their services. Just like so many other bussinesses the fokus has been to much on market-shares and to little on having big enough revenues the last years.
Re:Charge more. (Score:1)
Do you feel that the cable industry is also charging too little for their services? If not, DSL is probably in big trouble. While each technology has its advantages and disadvantages, I don't think there's really enough of a difference to justify big changes in price. Right now (in my area), cable modem with equivalent performance to DSL costs almost exactly the same amount.
Costs (Score:5, Funny)
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
Now, the recurring cost will be a bit less for Worldcom compared with Rhythms but not by a huge margin (basically by the amount it takes to service the smaller debt, plus some from economies of scale). So I don't think that this will be a fairly cheap endevour to run. However, as the DSL market is undergoing a shakeout there will be less competition, and this will push user costs up.
The equation is a bit less opex, low capex for the infrastructure, and more revenue generated due to price increases (and, possibly, provision of low cost high margin services to a larger pool of users). Hopefully, opex+capex servicing+investment revenue, or it's goodbye DSL.
Re:Costs (Score:2, Insightful)
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.
WCOM datacom strategy (Score:1, Interesting)
Nonetheless, WCOM's CLEC status does make it vulnerable to changes in the telecom regulatory sphere, and this only increases their sensitivity to potential ILEC-sponsored legislation. The recent tragedies in New York and Washington have back-burnered many of the bills in the telecom regulatory war, but watch for the introduction of sub rosa amendments and riders by both sides of the industry in the coming months.
(kd9:biz)
Re:WCOM datacom strategy (Score:1)
Re:WCOM datacom strategy (Score:1)
So, I'd say they started getting interested about 6 years ago, but that would be a guess because Bernie never invited me to any of those meetings. ;)
DeanT
worldcom sucks (Score:1)
Mostly they like hiring ex-military, cus they're cheap and take orders without thinking to much about it.
Re:worldcom sucks (Score:1)
I heard this from managers, this mostly applies to NOCs.
Mine was meant to be a comment on Worldcom, not (ex) military.
Re:worldcom sucks (Score:2)
Smart move (Score:3, Insightful)
> 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!).
Re:Smart move (Score:4, Insightful)
An obsolete infrastructure? I suspect that DSL will be with us for a long time as will cable. Both aren't ideal solutions. Both use existing lines and one or the other is sometimes the only broadband technology available to some people. The same goes for cable. Satellite broadband is another solution for those folks deep in the rural setting but that is still a rather pricy way to get broadband.
Those folks waiting are most likely unable to get broadband or can't afford it (and prices are going up). As for waiting for fiber...it will be a long time since infrastructure expenditures are going to be way, way doing with the current economic atmosphere.
I'm guessing you will get more of the same: 3rd party DSL providers getting squeezed by local telcos. The local telcos willing to absorb the pittance of a fine thrown at them for not opening up their lines (even when they do they aren't that helpful). There will be fewer and fewer 3rd party providers and a stagnation in the efforts to get fiber to close that Last Mile (heck even the Last Few Yards will be a big project).
That's just my opinion, I could be wrong.
Re:Smart move (Score:2)
Re:Smart move (Score:2, Interesting)
I gave it a lot of thought. Telocity/DirectTVDSL is the only service available to me that hands me a static IP, doesn't block ports, and doesn't mind if you set up a (small) network behind their router. There are enough good things there that I don't ming having ADSL instead of SDSL.
Of course, I don't upload multi-gig files, either....
Sean.
Re:Smart move (Score:1)
Re:Smart move (Score:1)
I think it's too late. My line was just re-activated last night after being down for a week. FYI - went from 784K SDSL to 900K/160K SDSL. I need to call them about the upload speed - when I talked to them about switching the line they claimed I'd get 1.5M/512K.
I'm probably too far from the CO to get the full 1.5M download, but I don't see any reason I shouldn't be getting the 512K up.
Re:Smart move (Score:1)
Please tell me I didn't just waste all that cash? Exactly who are they going to continue serving?
- Necron69
Re:Smart move (Score:2)
The only ones to rebound will be telcos (Score:1, Insightful)
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.
Capital expenditures (Score:4, Informative)
Of course, you have to add in the warm bodies in the call center, and the backbone bandwidth, but these are telcos, and are supposed(!) to have a good ATM backbone already. (Besides, moving surfers from dial-up to DSL saves a *HUGE* volume of voice capacity on the backbone anyhow).
Source for the above figures is the latest [dslprime.com] news report from DSL Prime [dslprime.com].
They provide a good free (as in beer) report on the DSL industry.
I hope so (Score:5, Insightful)
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.
Monopoly is not de jure (was Re:I hope so) (Score:2)
These ILECs do not have a legal monopoly on anything any more. You and I can string wire under or over the street next to theirs. It's just bad business to try. Several companies such as Worldcom (ex-MFS, Brooks, MCI), AT&T (ex-TCG), Metromedia, Hyperion, XO and ELI dumped a few billion dollars burying fiber under the streets in major business districts. Often right next to each other, guaranteeing that nobody would have enough business to be profitable. That's one reason why the telecom sector is so weak now. Local competition was opened nationwide in 1996 and there was so much cheap capital around at the time that a lot was squandered.
There is still a growing CLEC sector, but the failures of Covad (operating in Chapter 11), Rhythms, Northpoint, Vitts, BBO and others have demonstrated how hard it is to operate as a pure-play DSL provider. Many of the surviving CLECs, like Allegiance and McLeod USA, combine their own facilities with leased ILEC wire and do both voice and data. Rhythms leased the wire but only got the data revenue from it.
CLEC survival depends upon the FCC enforcing rules that require the Bells and other ILECs to interconnect and lease critical facilities to them. That has been rather lacking as of late. It also depends upon Congress *not* changing the rules and, for instance, passing the Dingell-Tauzin bill, which would essentially shut CLECs out of the DSL business and make it an unregulated ILEC monopoly.
Re:I hope so (Score:2)
First, the raw service is actually better than UUNET+Rhythms or UUNET+Covad(*) was. For some strange reason, Rhythms and Covad could only get my iDSL (144/144) while I can get regular DSL (344/128) from the telco. I don't know if this is the SBC monopoly abusing me, or the DSL providers being clueless.
But in terms of getting any kind of support, SBC is truly dismal. They force you go through a lengthly touch tone tree to try and diagnose the problem without an operator. You even have to select one of their invalid "solutions" before the system will let you "press 8 for an operator". And even though they sold me a router as part of my connection, they refused to support it. A more cooperative rep I talked to later told me that I should have insisted on the case escalating to a higher level, but the front line folks don't offer to do that; they just say it can't be done.
Even though I'm paying less for SBC and getting better raw service, I'm still upset at the monopoly situation. I just wish Rhythms had hung on because I liked 'em. But I'm not going to quit SBC and go back with UUNET due to the better raw service I've gotten. It's a close-run thing, though.
D
(*) After months of trying, Covad was unable to get me a connection that would stay up for more than 24 consecutive hours. As a result, UUNET switched me to Rhythms.
Amen (Score:1)
6 months later SBC wouldn't quit bothering me to hook up DSL to the SAME lines over the SAME CO equipment that Northpoint was trying to use. I put 2 and 2 together and saw what was going on : SBC was giving Northpoint the runaround and stranging their business while they got their own offering ready.
The ending for me was that I use Cable for broadband. The ending for Northpoint was less attractive. I hope these guys can build a solid case and take a serious bite out of the ILECs.
OLIGOPOLY FIRESALE (Score:1)
MACROECONOMIC
This would only improve the existing long-distance carrier company's portfolio a bit.
MACRO-MACROECONOMIC
WorldCom, good move. Now, let's start seeing those revenues rolling in (more customers or more fees?)
MICROECONOMIC
More consolidation, less competition. More profit margin, less consumer interest: just like ISDN in the 1980s.
POLITCAL
With Rep. Billy Tauzin (La) and his deeply baby-Bells-stuffed pocket sitting in Telecommunication Committee, nothing will improve in terms of DSL competition, just less. AT&T @Home Cable won't improve either for that matter. A perfect politician advancing through inactions.
GOVERNMENT
FAA needs to get off their dufus and enact less colocation cost for competitive DSLAMs situated in baby Bell's utility cages.
BIRDEYE VIEW
It gets Worse for the consumers.
Re:OLIGOPOLY FIRESALE (Score:1)
Oops: Make that FCC (Score:1)
Brain-fart.
Two comments... (Score:2)
Secondly, DSL will not bounce back until there is more action taken against the ILECs like Verizon and SBC/Ameritech. The 4-6 weeks to set up a DSL line to a CLEC is typically to allow the amount of time for the ILEC to go out and switch it over; since this means a loss of a potental customer to the ILEC, they drag their heels as much as possible, despite threats of gov't intervention or penality. Here in the mid-west, Ameritech land, we're just getting over our hundreds-of-million-dollar spanking of Ameritech for poor customer service and repairwork of normal phone lines (with further penalties for future incompenticies), but nothing to cover the broadband market. $100M may seem like a lot, but that's chump change to SBC/Ameritech; it's probably cheaper for them to incure these fines than to spend more to bump up service.
Re:Two comments... (Score:1)
"The acquisition will enable WorldCom to continue to deliver DSL access to a wide range of WorldCom services, including Internet, VPN, frame relay and ATM, through approximately 700 central offices in 31 major metropolitan areas where WorldCom already has a solid DSL customer base, including: "
http://news.moneycentral.msn.com/ticker/article
DSL Rebound.... sorta (Score:2, Interesting)
I was wrong, we went under too. I suspect the DSL industry will rebound but it will only rebound as a few companies that bought out the first generation of DSL providers for penies of what it cost to creat the infrastructure and customer base.
I see the same thing happening with the cable modem industry, as Adelphia is gobbling up cable providers that fall too far into the red. Practically overnight, an unheard of little Cable Company in New York has sprung up with customers and pipes coast to coast at a fraction of what it cost to build.
This is a good and a bad thing... it's good for present DSL customers with local COs because someone else will likely move in and keep their connection on... but don't expect these guys to invest in more COs to expand their reach to more customers. If you don't have a local CO now, you won't for the forseeable future.
Re:DSL Rebound.... sorta (Score:1)
DSL's speed is a little slower (I think) but with the BW cap by TW it doesn't matter. Do DSL co's block port 25? I've been waiting for an alternative to Time-Warner cable for a long time...it's looking bleak....
Re:DSL Rebound.... sorta (Score:1)
Most ADSL providers block port 25 and almost all ADSL is capped at about what Road-Runner is capping. If you wish to run a server I would recomend an SDSL product... which can be very expensive, but cheaper than a T1 and faster. I am not aware of any port blocking by any SDSL provider.
Profitable? I wish I knew... (Score:4, Interesting)
Whether you apply this to telecom companies (360 Networks) that have buried a tremendous amount of fiber or to internet companies (Webvan and their excellent warehouses and technology or take your pick of high-flying dotcom that bought too many Sun servers) it is not difficult to understand. When you pay 10% of the original price it is easier to be profitable. How surprised would you be if Worldcom DIDN'T cut a deal with the ILECs on long distance in order to get cheaper rates for DSL?
Re:Profitable? I wish I knew... (Score:2)
Which is true.
But it's a long way of saying "The early bird gets the worm, but the second mouse gets the cheese."
All it really means is that the billions of dollars in capital to build the network got evaporated when the shareholders and bondholders took a bath in bankruptcy, and after a couple of iterations of "Oops, we couldn't make it work, here, you take it off our hands for 30 cents on the dollar", the "cost" drops.
The "cost" of building the network, of course, hasn't dropped -- only what people are willing to sell the network for once it's been built.
Of course, those are the risks you take when you invest capital. In this case, the shareholders and bondholders got burned, but the world got a pretty neat network out of the deal.
Define "Rebound" (Score:1, Insightful)
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.
Already Disconnected Service (Score:1)
this time, having done that with Northpoint. While
I was in limbo that time I ordered Earthlink. Ended
up with two DSLs as isp magically got me on Rhythms
after saying repeatedly they would not be able to.
When I got the letter saying disconnect was around
the corner I just dropped the service. I was paying
$150 a month for 384/384 with the small IP block.
I now have 1.5Mb down (I am very close to the CO)
about 100 up, but no static IP. Hopefully this will
not be far off.
Conclusion: fuck rhythms fuck northpoint and I bet
you a lot of people said the same thing in August
Only if "Rebound" means slow expensive monopoly (Score:2)
No, I see this as the Bells finally having knifed the baby.
These entrenched companies didn't want to open up their developed-under-monopoly wiring plants to outsiders but desperately wanted access to the long-distance market and so were willing to concede entry. However this didn't mean they had to play fair and so they took every opportunity and used every trick in the book to screw, backstab and block their competition. Now that they've managed to eliminate that competition they can buy the carcasses for pennies on the dollar and return to their slow expensive monopolistic ways.
This isn't a rebound, it's a rape and the consumers are the next to get screwed unwillingly.
Rythms still going (Score:1)
DSL (Score:1)
Get cable.
Get a 56k modem *VIVA BAUD!*
Get a wireless broadband solution =)
Oh oh oh...nevermind forgot what the 4th one was.
Just be happy we don't have to put our phone receiver on a 'docking station' anymore just to link-up.
Just what WorldCom needs (Score:1)
Rhythms and discontinuation of service (Score:1, Interesting)