"Baby Bells are reducing spending on their own broadband and digital services. Chalk up another victory for them."
They live to kill and kill to leave.
Lex: US telecoms
Published: April 6 2001 19:53GMT | Last Updated: April 6 2001 19:57GMT
Two years ago, America's alternative telecoms companies, known as competitive local exchange carriers or CLECs, were hailed as the future. With their modern broadband networks and radio hubs, they promised to wire buildings and businesses across the nation and run rings around the fat, sluggish incumbents: the Baby Bells. Today, all but a handful of the dozens of CLECs started in the wake of deregulation have closed, been swallowed up or are on the verge of extinction.
The Bells must take their share of blame for this. By stalling in providing access to their customers and networks they often managed to outlast young companies that needed to show top-line progress to secure further funding. But in many cases, failure was simply due to poor management and overexpansion. There is no need to weep for those.
Now, however, the CLEC crisis has reached a second phase. Even the handful of well-run companies that have hit all their operational targets are coming under attack. This is entirely a crisis of confidence about funding rather than the validity of the business model - but it can be equally deadly. The latest example is Winstar, which was on track to become ebitda positive this year. But with $4bn of debt and little chance of raising fresh cash, it had to lay off 44 per cent of its workforce this week and halt all expansion. With its market value down to $45m, its financial options are narrowing sharply. Meanwhile, as the CLEC threat diminishes, the Baby Bells are reducing spending on their own broadband and digital services. Chalk up another victory for them. |
