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To: max power who wrote (806)	9/12/2000 2:29:06 AM
From: Scrapps	Read Replies (1) \| Respond to of 2404

Holy Moley!!! DSL Prime says... in reference to the Northpoint and Covad deals with the RBOCs (Verison and SBC) "But the reality is that competition is rapidly being emasculated." <OUCH!!> Oh my that sounds painful. The Dictionary says.... e·mas·cu·late (-msky-lt) v. tr. e·mas·cu·lat·ed, e·mas·cu·lat·ing, e·mas·cu·lates. To castrate. To deprive of strength or vigor; weaken. adj. (-lt) Deprived of virility, strength, or vigor. -------------------------------------------------------------------------------- [Latin masculre, mascult-: -, ex-, ex- + masculus, male, diminutive of ms, male, man.] -------------------------------------------------------------------------------- e·mascu·lation n. e·mascu·lative or e·mascu·la·tory (-l-tôr, -tr) adj. e·mascu·lator n. There is no demasculated...so I guess that fixes that! Shame on me, I'll try to cut this short. WHOOPS...sorry. Rule #1...never go home with a Bobbit! And it is much better to be cut-off by the Bar-tender. A pretty safe rule of thumb when you consider it. "SBC buys into Covad $150M gets 6% of stock, $600M resale sets the agenda, $5.75 linesharing price SBC is serious about going national, so working with Covad out of region makes sense. It also settled anti-trust and other complaints that were tying up resources around the network - and might hold back the grail, long-distance approval. It brings a major competitor in from the cold, while increasing the size of the "club" who make decisions by compromise, not litigation. By analogy, US West or BellSouth will move on Rhythms next, although the Rhythms network was deliberately designed to complement MCI, and MCI was always the presumed suitor. SBC will primarily resell business service from Covad, confirming Covad's increasing emphasis on commercial service. Since the Bluestar buy, Covad has been increasingly moving to commercial customers and direct sales. (We are inferring that from their refusal to match the service speeds promised by the telcos, as well as the focus of their marketing efforts, They are taking orders, but not as aggressively pricing or promoting the service. Covad strongly disagrees with this inference, and expects to expand rapidly in consumer next year as line sharing is more available.) Covad is referring away small and mid-sized ISPs already, as we've previously reported. NorthPoint also is more in the business market - note below that Phoenix dropped them for residential. Separately, Covad indicated Q3 subs will top 200,000, beating the street's estimates, and they are selling $500M in convertibles. These deals will fund them into 2002. High borrowing costs (around 13%) have been pushing the CLECs into making deals for ILEC investment. (11/9/00) Editors note: 6% is not control, unlike Verizon's 55% buy of NorthPoint, so the deal will be hard to stop. But the reality is that competition is rapidly being emasculated. Rhythms has a great opportunity, but with their market price battered down by 75% will be hard pressed to take advantage of it. Meanwhile, the FCC policy of encouraging competition may be on the verge of failing - competition only works with enough competitors to have an open market. Returning to tougher regulation on the state and federal level is the logical conclusion of a re-emerging oligopoly, but most think that's a terrible solution. In addition, as we've learned covering Washington, the competitive companies are needed to provide a strong voice in the regulatory system. This is not a time when either public interest groups or the press can take the lead; "Open access" would have died without AOL and telco support, while the AOL/Time Warner merger's main opposition is coming from Disney. db Dhruv Khanna of Covad disagreed, saying that "instead this is a huge endorsement of the telecom act, representing a statement by SBC of the viability of a standalone CLEC and a bet on its success." Thinking about his comment, we see his point. This can be viewed as the Covad's and the DLECs winning the battle, and SBC accepting their success. We'll all see what the overall effect on competition will prove over time. "