Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : AUTOHOME, Inc -- Ignore unavailable to you. Want to Upgrade?

To: KailuaBoy who wrote (19944)	3/5/2000 1:46:00 AM
From: KW Wingman	Respond to of 29970

DSL Provider Revenue Well Running Dry IMO, time will prove the value of Excite to @Home for any remaining doubters. The DSL investors may want to send some money @Home away from DSL hype to growing value. zdnet.com DSL Provider Revenue Well Running Dry By Carol Wilson and Max Smetannikov, Inter@ctive Week February 28, 2000 8:46 AM ET Digital Subscriber Line service companies are learning what dial-up providers discovered long ago - selling access alone is not enough. With their backs against the wall due to mounting losses, dropping stock prices and stiff competition from the Bells, Digital Subscriber Line wholesalers Covad Communications, NorthPoint Communications and Rhythms NetConnections are working to couple their consumer DSL offerings with a brand new set of content services. "I think these companies are under enormous financial pressure," said Telechoice analyst Beth Gage. "They are still in a heavy build-out phase, which means they are burning through capital, and now the incumbents are getting their service delivery stuff down and approaching a point where they can scale services faster. The DSL [competitive local exchange carriers (CLECs)] need to add more value to their networks, pursue other channels and other customer bases." Furthest ahead is Northpoint, with its new "Blast" initiative aimed at delivering game and entertainment content from the edge of its network. The company has made deals with Media Station for online CD-ROM games, with CoolCast for streaming sports information and with Clearband for old movies. Northpoint is still working on how it will price the offerings, but an HBO-style monthly model is likely. Northpoint beat Covad and Rhythms to the punch with this announcement, but its two main competitors are planning similar offerings. Rhythms is running a trial with Akamai Technologies,Digital Island, iBeam Broadcasting and The Microsoft Network; Covad is testing the water with InterVU, Real Networks and Yahoo!. The success or failure of projects like Blast could mean life or death to the trio of CLECs. DSL networks are hugely expensive to build, requiring that equipment be placed in each telephone company central office and lines be installed to each customer, which explains why none of the three big data CLECs is anywhere near profitability. Covad and Northpoint lost $52 million and $58.8 million in the fourth quarter of 1999 alone. Even as they continue to pump millions into their DSL networks, however, the market price for basic DSL service is dropping sharply as the Bell companies aggressively enter the fray. SBC Communications, which in October 1999 announced a $6 billion DSL-building initiative called Project Pronto, recently dropped its residential DSL prices to $39.95 per month with free installation. While the data CLECs primarily sell wholesale services to small and mid-sized businesses through Internet service provider partners, they have been forced to drop their DSL prices as well, said Terry Barnich, president of New Paradigm Resources Group. "I think there is a timing issue here," said Barnich. "I don't think these guys expected the price of DSL to drop so quickly. They always knew they were going to have to sell more services to be profitable, but I don't think they expected the change to come as soon as it did." There is an important bright spot on the horizon. By this summer, the Bell companies must open their networks to line sharing, which will give the data CLECs access to existing voice service lines at about half the cost they now pay an incumbent to install a new copper line. "I think line sharing is going to have an impact," said Gage. "But it's hard to tell how big that will be." Northpoint Chief Executive Liz Fetter said line sharing would cut her circuit provisioning costs from about $20 to about $4 per new customer. As the CLECs bulk up with new services, they could become attractive acquisition targets for content providers, who now can see clear advantages of owning a broadband last-mile infrastructure. "I think there will be some very interesting marriages, but whether people just date, whether they get engaged or whether they actually get married is very difficult to predict," Fetter said.