Strange Broadband Bedfellows?

SAN MATEO (08/08/2000) - Verizon Corp.'s announcement Tuesday that it will line up all of its DSL wherewithal behind emerging carrier NorthPoint Communications Group Inc. through a whopping US$800 million merger signals huge changes on the DSL landscape.

For New York-based Verizon, the deal provides a much-needed way to get at a national customer base. The company -- a combination of local phone giants Bell Atlantic and GTE -- will now be able to offer businesses a comprehensive way of providing DSL to remote offices and employees, officials said.

It's a path that other RBOCs (regional Bell operating companies) have also started down. San Antonio-based SBC Communications has in place a deal with DSL newcomer Network Access Solutions to provide service outside SBC's territory.

Verizon's fresh deal with NorthPoint marks the first time such a relationship has been cemented with a merger, but it is likely not the last, said David Willis, a Plano, Texas-based program director for Meta Group"Look now for Covad and Rhythms to be considered as merger possibilities" for the RBOCs and even IXCs (interexchange carriers) such as WorldCom and AT&T, Willis said.

This new day of deals between entrenched carriers and emerging carriers such as NorthPoint and Covad is a major departure from the dynamic that once prevailed over the DSL industry.

Last fall, the Federal Communications Commission had to pry open the local voice loops owned by local phone companies, forcing them to let newer competitive carriers offer service over those lines.

"A lot has changed since then," Willis said. "However, if you look at this move, Verizon has taken a wholesale competitor out of the market."

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