Qwest, Northpoint Deals Could Aid DSL

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Cable's primary competition for carrying high-speed
data gained momentum last week with several significant deals backing telco providers of
networking and digital-subscriber-line services.

Competitive local-exchange carrier NorthPoint
Communications Inc. landed new alliances and cash investments from Microsoft Corp. and
Cable & Wireless plc, both of which indicated that they will use DSL as a key
component of their high-speed-data access strategies.

Separately, BellSouth Corp. announced a $3.5 billion
investment in Qwest Communications International Inc., which is completing a national
high-speed fiber optic backbone that will become an important element of the regional Bell
operating company's plans to offer data services and long distance to business
customers beyond its Southeast territory.

Microsoft -- which had already tapped NorthPoint to provide
services for the Chicago leg of its planned four-city consumer DSL trials -- will buy $30
million of NorthPoint in the CLEC's upcoming initial public offering of stock.

The software giant also said it entered into a strategic
alliance with NorthPoint to help accelerate the availability of DSL, both with cash and
software development, including specification of a standards-based content-delivery
interface and architecture.

Microsoft hopes that interface will facilitate connections
between network operators such as NorthPoint and providers of streaming video, audio and
other applications, fostering the creation of new features for its own MSN.com, as well as
for other Web portals.

NorthPoint will market co-branded versions of MSN to its
more than 85 Internet-service-provider partners nationally, while Microsoft will market
NorthPoint DSL service through its own direct-sales channels.

Microsoft -- already a significant direct or indirect
investor in cable-modem services @Home Network (through Comcast Corp.) and Road Runner --
plans the DSL trials as a prelude to a 20-city commercial rollout by this fall of
high-speed phone-line access to its MSN ISP and portal.

Although it has not detailed its carrier plans for the
commercial rollout, Microsoft's deal with NorthPoint includes the wholesale
provisioning of about 100,000 NorthPoint DSL lines over the next two years.

San Francisco-based NorthPoint plans to boost its service
footprint to 68 cities by year-end from its current 36.

Other carriers serving the Microsoft DSL trials will be
BellSouth Corp. in Atlanta; SBC Communications Inc.'s Pacific Bell unit in San Diego;
and GTE Corp. in Seattle.

Microsoft said it is already gleaning information from the
trials to help address aspects of broadband-data access, such as end-user requirements and
the interface between content providers and network providers.

"We're really trying to take an end-to-end view
as far as broadband services," said Jonathan Usher, Microsoft's
telecommunications-industry marketing manager. "It's not enough just to work
with the manufacturers of modems and DSLAMs [DSL-access multiplexers]."

The Microsoft coup preceded NorthPoint's announcement
of another significant partner in C&W, which is investing $5 million in the carrier
and entering a strategic alliance making NorthPoint its preferred DSL provider.

Cable & Wireless USA said it would use
NorthPoint's DSL as a high-speed "last-mile" connection with its own
national multiple OC-12 Internet backbone.

Besides access, the companies will develop new joint
service offerings such as the use of NorthPoint's network to originate and terminate
C&W's voice, frame-relay and asynchronous-transfer-mode traffic.

C&W also said it would explore possible international
DSL deployments connected with its global networks.

BellSouth -- which offers cable service in Atlanta;
Birmingham, Ala.; and Charleston, S.C., over hybrid fiber-coaxial systems -- could also
link headends in new market areas to Qwest's network, instead of having to deploy its
own lines, a spokesman said. But the emphasis will initially be on more established
services.

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