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Rhythms Struts into Consumer DSL Market

On the heels of the Federal Communications Commission's line-sharing agreement enacted Nov. 18, Rhythms NetConnections Inc., Monday launched its consumer Digital Subscriber Line services.

The FCC line sharing rule forces incumbent local exchange carriers to let competitors offer advanced broadband services of the same wires that carry plain old telephone connections.

Catherine Hapka, Rhythms (RTHM) chairman and chief executive officer, said the FCC ruling was great news or Rhythms expansion plans.

"We believe the timing couldn't be better for Rhythms to enter the consumer market," Hapka said. "DSL continues to emerge as the broadband service of choice and the FCC has just granted consumers the ability to receive DSL services over the same telephone lines that already carry their voice services."

Rhythms offers its consumer service through Internet service providers, including national players DSLnetworks and Telocity. Flat-rate monthly prices for consumer service, which include Internet access, start in the range of $40-50 for a 384-kilobit connection.

Hapka said that its broadband services offer consumers a cost-effective choice of high-speed access to the Internet.

"Our service is widely available, affordably priced and we believe it provides a level of choice that competing technologies and other DSL providers, including local phone companies, cannot match," Hapka added.

The high-speed Internet access provider intends to introduce the offer through a $50 million national advertising campaign that begins Monday on ABC's Monday Night Football.

Rhythms intends to announce additional ISP partnerships in the near future and has plans to deploy DSL services to 45 percent of consumers nationwide by the end of 2000.

Phoenix Networks, Inc. and Flashcom Inc. Monday formed an alliance with Rhythms to offer DSL-based Internet access to consumers in their respective U.S. markets.

According to the Yankee Group, the consumer DSL market will reach approximately 700,000 subscribers by the end of 2000 and 2.7 million subscribers by the end of 2002. Rhythms estimates that this projection translates into more than a $1 billion market opportunity in the near term.

Fritz McCormick, Yankee Group analyst, said the recent FCC line-sharing ruling bodes well for companies like Rhythms.

"Rhythms has worked hard to develop an extensive national footprint and strong ISP partners. Those attributes will help it tap into the quickly growing residential broadband market," McCormick said.



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