Rhythms NetConnections Inc., once a promising independent provider of
digital-subscriber-line services, said Friday that it would unplug all of its
customers within the next month and lay off 700 employees, or about 75 percent
of its staff.
About 85 percent of affected employees are based in Rhythms' home state of
Rhythms, which filed for bankruptcy Aug. 2, said it intends to help its
customers find alternative DSL providers during the transition. The company
added that it sent service-termination notices to customers Thursday evening.
Rhythms had 83,000 subscribers as of March 31.
Like other independent DSL providers, such as the now-defunct NorthPoint
Communications Inc., Rhythms has had major problems raising more funds to
continue operations through to profitability.
Covad Communications Group Inc. -- the largest DSL provider outside of the
Bells, with 330,000 customers -- said earlier this week that it will file for
bankruptcy protection later this month, and it is negotiating with bondholders
to unload its $1.4 billion debt.