RealTime IT News

Microsoft Goes To DSL By Taking $30 Million Rhythms Stake

Microsoft Corp. this week agreed to a $30 million equity stake in high-speed networking provider Rhythms NetConnections Inc. and will offer the DSL provider's customers with a co-branded MSN portal.

The announcement marks the Redmond, Wash., giant's first foray into the DSL market, although the company has several high-speed cable ties with Comcast, Road Runner and Qwest Communications.

The co-branded MSN portal is slated to debut this summer. With the new service, Microsoft customers can gain quick access to the Internet and private networks, and additional services.

Customers of Rhythms' enterprise "teleworker" and small-business services will be enabled with a MSN Hotmail Web-based e-mail account and other communications services, which will be bundled into the co-branded portal.

Other portal services will include Microsoft Passport, MSN Search and Windows Media Technologies. Additional technologies in development include multimedia communications for business and teleworker portals, and a virtual laboratory linking both companies' testing facilities that certify high-bandwidth, network-based applications.

"Businesses large and small are looking to provide their employees with a full set of integrated services that span desktops at work and access to the same capabilities at home for teleworkers," said Thomas Koll, vice president of Microsoft's Internet customer unit.

Rhythms launched with financial backing by Kleiner Perkins Caufield & Byers, Enterprise Partners, The Sprout Group and Brentwood Venture. Enron Corporation also holds an equity investment in Rhythms.

On Feb. 16, the Englewood, Co.-based company announced it planned an initial public offering managed by Merrill Lynch & Co., Salomon Smith Barney, Hambrecht & Quist and Thomas Weisel Partners LLC. The IPO is expected sometime later this month.