New Edge’s New Milestone

New Edge Networks turned the
corner on another milestone with Tuesday’s announcement of its digital
subscriber line (DSL) services in 300 markets throughout the U.S.

New Edge has taken the lead in its promise to “bridge the digital divide,”
a much bandied-about catch phrase touted by many telecommunications
companies, but one rarely followed through those same companies. New Edge
caters its DSL offerings to small, midsize and semi-rural communities.

Sal Cinquegrani, New Edge executive director of communications and investor
relations, said the contagious demand for DSL is making it hard to keep up
with DSL demand.

“Most companies attitude towards DSL in the small, medium and rural markets
is that there’s not enough people who will be able to make the operation
profitable,” Cinquegrani said. “But the truth is, people can’t get it fast
enough. It’s what I like to call contagious demand; when people see what
DSL can do, they have to get it. It’s so popular now that demand is
outstripping supply.

“For many of the people in smaller markets,” Cinquegrani continued,
“there’s no other high-speed option for them; the telephone companies are
taking their time putting the equipment in their central offices, wireless
is an expensive option and much of the cable network hasn’t been upgraded yet.”

Dan Moffat, New Edge president, chief executive officer and co-founder,
said his company is running ahead of schedule and trying to keep up with
market demand.

“By any standard our speed to coverage is a remarkable feat,” Moffat
said. “We’re walking the talk and continuing to fulfill our mission of
nationwide coverage for smaller, underserved communities where a huge
appetite exists for broadband and always-on high speed Internet connections.”

In addition to the 302 central offices the competitive local exchange
carrier (CLEC) provides service, New Edge has the equipment set up in 200
other locations and is just waiting to finalize operations. The company is
at work on another 600 COs.

Cinquegrani said the company is not looking past its nationwide deployment
goal of 1,100 COs, which they expect to be completed next year.

“We’ve pretty much wrapped up the first 500 central offices, which was a
huge undertaking for our team,” Cinquegrani said. “We’ve come a long way
since December, when we put in our first DSLAM. It’s going to take a lot
more work to finish up with the other 600 locations we have planned. After
that, our focus is going to be to replicate the aggressive network
deployment into our sales and marketing to make partnerships with Internet
service providers.

“After that,” Cinquegrani added, “we’ll check the landscape to see whether
we want to pursue the smaller or larger markets.”

The rollout is part of an industry wide movement by CLECs throughout the
country scrambling to gain market share offering DSL services. It’s the
baby Bells, however, that have the edge in DSL deployment, since telcos own
the central offices and networks running throughout. Currently, industry
giant SBC Communications Inc., holds the lead with more than 400,000 DSL subscribers.

While Covad Communications Group, is the leader in DSL subscribers for a CLEC, a Cahners In-Stat reports states the 6-to-1
difference with baby Bells is too great a gap to overcome.

Mike Lowe, Cahners In-Stat advanced carriers service senior analyst and
author of “DSL Service
Providers and Their Rollouts”
, said the CLECs have kept themselves
in the race so far by capturing some market share, but it won’t be enough
in the end.

“At the end of the day, CLECs d

o not own the network, nor do they own the
customer,” Lowe said. “As wholesalers, they are somewhat beholden to their
retail partners, and as users of the RBOC’s networks, they are potentially
at the mercy of the incumbent carrier.”

Cinquegrani said his company isn’t worried about the reports or the rumors
going around about the so-called eventual demise of the CLEC.

“Back in 1984,” Cinquegrani said, “when AT&T was broken into the baby Bells and a
long-distance company, there were a number of insurgent companies like MCI
[now Worldcom Inc. ]
and Sprint Corp. “Analysts didn’t think they had a chance against the services
AT&T could provide. But you know what, they survived, and I
think you can agree that both are respected and large members in the industry.”

“There’s a lot of chatter going on throughout the industry about
consolidation,” Cinquegrani added. “When this started, a lot of the
smaller companies relied on the capital market to help fund their
ventures. When the market took a tumble, you saw a lot of the smaller
companies go to the deep pockets.

Failure is not something we’re worried about at all, Cinquegrani
continued. We’re just about finished with our third round of funding; in
fact we’re negotiating right now. Our success with investors is proof that
our business plan is sound.

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