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WorldCom Acquires DSL Assets

Deal will allow WorldCom to continue serving customers in 31 markets that had received DSL service from bankrupt Rhythms NetConnections.
A federal bankruptcy court in New York late Tuesday approved WorldCom's $40 million offer to acquire most of the digital-subscriber-line assets of bankrupt DSL provider Rhythms NetConnections Inc. The deal gives Rhythms customers in 31 cities the option of continuing to receive DSL services.

Rhythms has been operating under Chapter 11 bankruptcy and had asked the Federal Communications Commission for permission to cease providing service to its DSL customers. The company delivered service from 1,250 telephone switching centers nationwide, and WorldCom acquires Rhythms' assets in 700 of those.

The acquisition ensures WorldCom can continue providing DSL services in the 31 cities in question and it gives a boost to WorldCom's goal of providing DSL access nationwide. Some WorldCom customers in those 31 markets had received DSL service from Rhythms and thus were facing potential service disruptions as a result of the company's bankruptcy, according to WorldCom officials.

International Data Corp. analyst Amy Harris says the deal gives WorldCom's broadband service a much-needed shot in the arm. Says Harris, "WorldCom hasn't had a comprehensive broadband strategy, so it makes sense for WorldCom to purchase the assets of a national provider."