WorldCom Closes Rhythms Buy Early

With a speedier-than-anticipated closure that saves them $9 million,
WorldCom officials announced Wednesday afternoon they
had finished taking over assets of failed Rhythms NetConnections.

Rhythms, once the third largest independent digital subscriber line (DSL)
provider in the U.S., confirmed reports in September of a WorldCom buyout,
saving many (but not all) customers from having to look for a new provider.

The long-distance carrier giant originally
bought $40 million worth
of Rhythms network, just enough to bolster the
capabilities of its existing DSL presence in the Tier I cities around the
U.S. By closing the deal one month earlier than its scheduled January
close, WorldCom was able to reduce that amount to $31 million.

Brian Brewer, WorldCom chief marketing officer, said the buyout that
started three months ago puts them in good stead for a promotional push in
time for the holidays.

“Since we announced the deal in September we were able to keep thousands of
users up and running through our debtor-in-financing agreement,” Brewer
said. “We are now even better positioned to leverage DSL as an important
component of WorldCom’s strategy to deliver a wide range of business-class
access services that enable our data and Internet customers to grow their
business.”

WorldCom, which overtook
AT&T
as the most popular long-distance company in the
U.S. recently, is also looking to gain inroads to compete for high-speed
business-class data services. By purchasing parts of Rhythms network,
WorldCom can now offer a more robust virtual private networking (VPN),
frame relay and asynchronous transfer mode (ATM) services in 31 cities
around the country.

DSL service, the poster child for high-speed Internet services despite its
shaky start, is one of the cornerstones for carriers today hoping to snag a
large corporate contract.

Where in yesterday’s market, a carrier could land a Fortune 500 company by
offering a vanilla T-1 or DC-3 to the office, today’s corporations need to
take into consideration remote conferencing over a dedicated line using
different technology platforms depending on client needs. Rhythms service
joins WorldCom’s already-established fixed wireless, satellite, dial up and
fiber-optic traffic technologies, perfect for any company needing
customized Internet connections.

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