Rhythms Struts into Consumer DSL Market

On the heels of the Federal Communications
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

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
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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