Just found this...
That nicely completes the BK suite: NorthPoint, Rhythms, Covad.
DSL now in firm control of the ILECs, competition crushed.
--Mitch
NetSide
As someone who has 14 DS3s into their network I think this is very good
news. Covad was crushed with $160 million a year payments on $1.3 billion
in debt. That now all gets converted into common stock (sucks for common
shareholders) and everything is reset. This lowers cash needed to break
even down to $200 million from $400 million.
-Nathan
i read a similar article y'day, and that was the first that i had
heard mention of rhythms going down. either i was too busy pulling my
hair out last month or they were really good about keeping it quiet.
*sigh*
looks like verizon is gonna be the only xdsl provider left solvent
when the dust settles. how scary is that, and how predictable?
deeann m.m. mikula
director of operations
telerama public access internet
http://www.telerama.com
1.877.688.3200
And just in case anyone is curious, this is a potential scenario for
many struggling telco startups. (Bankruptcy to clear debt and
eliminate interest payments so there there is at least a CHANCE to
pull ahead.)
-Wayne
Although this may well ultimately prove true, people do realize that
filing for chapter 11 is not synonymous with going out of business,
right?
James Smallacombe PlantageNet, Inc. CEO and Janitor
up@3.am http://3.am
And just in case anyone is curious, this is a potential scenario for
many struggling telco startups. (Bankruptcy to clear debt and
eliminate interest payments so there there is at least a CHANCE to
pull ahead.)
Yep, on top of that many companies that are bringing in some new money are
buying back debt at pennies on the dollar and lowering their debt burden by
quite a bit. Having said that I am still happy that I am not dependent on
DSL, I also use T1 and frac T1 as last mile access technologies.
<>
Nathan Stratton CTO, Exario Networks, Inc.
nathan@robotics.net nathan@exario.net
http://www.robotics.net http://www.exario.net
While not synonymous, they are very close for a tech company.
Chapter 11 takes a long time, and during that time you don't get
to upgrade your network or the like. Having a year of no upgrades
in a network often leads to customers leaving. Just try to win
any new business while in Chapter 11.
Bottom line, if a tech company makes it through chapter 11, they
are quite likely to come out very week, and very behind. Never
say never, Covad could still go on to do wonderful things, but
I think the odds are heavily stacked against them.
yes yes yes, but i'm not optimistic, that all. (actually, generally i
am, but when it comes to competing with the RBOCs, i have no hope for
anyone.)
deeann m.m. mikula
director of operations
telerama public access internet
http://www.telerama.com
1.877.688.3200
I've seen several references to Covad's business unit that does DSL
continuing normal operations - it's the parent company that's reorganizing.
If they *do* make a good stock-for-debt swap, they may come out in a much
*more* competitive position. How would YOUR balance sheets look if you
suddenly had $160M/year more to play with?
In today's business climate, I'd *worry* if my competitor went Chapter 11
with a good clear reorganization plan (as opposed to a liquidation plan).
Ownership of the C/O and the last mile confers ILECs an unfair advantage
in this business. While they have set up separate companies for Internet
access, they still benefit from moving funds from one pocket to another,
within the same conglomerate. No independent company can realistically
have a fair shot at competing in this environment, as demonstrated by
the string of bankruptcies we just witnessed.
--Mitch
NetSide
Also sprach Mitch Halmu
Ownership of the C/O and the last mile confers ILECs an unfair
advantage in this business. While they have set up separate companies
for Internet access, they still benefit from moving funds from one
pocket to another, within the same conglomerate. No independent company
can realistically have a fair shot at competing in this environment, as
demonstrated by the string of bankruptcies we just witnessed.
To pick a nit here. BellSouth sells their Internet services and
regulated telco services out of the same actual company within the
corporate umbrella.
This just means that the moving money from one pocket to another is even
*worse* in this case as its *purely* an accounting entry, there's not
even the *pretense* that there's a cash transaction going on.
Maybe. Maybe not.
I'd agree with that, but I think there's more to it than that. Cash
management and order turnaround time play a big role in the success of a
DLEC, too.
:> Ownership of the C/O and the last mile confers ILECs an unfair advantage
:> in this business
:
:I'd agree with that, but I think there's more to it than that. Cash
:management and order turnaround time play a big role in the success of a
:DLEC, too.
Bingo. Before everyone cries for the DLECs, many (including myself, a
card-carrying RBOC-basher) would argue that embarassingly poor cash
management was one of the most significant factors contributing to the
demise of the "big three".
-brian
I am by no means a Baby Bell apologist, having seen the way our local RBOC
screws its competitors, but IIRC collections was a big issue for all three
of the DLECs.