While many DSL providers stand at the threshold of financial ruin or have already exited the market, one national wholesaler waxes eloquent on the turbid nature of providing DSL services to ISPs nationwide.

by Jim Wagner of internetnews.com [January 22, 2001]

Invariably, the rise and fall of digital subscriber line providers is a timely matter worthy of discussion, thought, and study.

New Edge Networks is a national DSL wholesaler and broadband Internet service provider headquartered in Vancouver, WA. It is also thriving—at a time when few DSL providers are prospering.

How has New Edge Networks avoided the economic plague endemic among other providers? Simple—the company's business plan is working—New Edge Networks focuses on delivering DSL access in two- and three- tier markets throughout the U.S.

By avoiding heavily disputed markets—like New York and Los Angeles—New Edge Networks regularly goes head-to-head with RBOCs only, and it does so in smaller cities with populations of 100,000 or less. As a reseller, New Edge Networks offers independent ISPs the opportunity to deploy DSL services, challenging local Baby Bells for soliciting customers in their respective locales.

Dan Moffat, New Edge Networks president, chief executive officer and co-founder discusses several onerous issues assailing DSL providers in today's Internet economy. From DSL deployment matters, industry-wide staff reductions, to competing with RBOCs, Moffat expresses hope for the tattered DSL segment of the industry in the New Year.

[ISP-Planet] New Edge Networks has had to take some cost cutting measures, just like NorthPoint, Rhythms, and Covad. Are more staff cuts planned in the short-term?

[Moffat] No, we don't plan on any more staff cuts. Now, with that said, you never want to make a blanket statement that you're not going to make business adjustments.

When we got our financing in October, we could have taken two views—one view is 'great, we got our financing, full speed ahead' and the second view is 'great, we got our financing, lets trim our sails and make sure that we'll be able to weather the storm we think is coming.'

Dan Moffat co-founded New Edge Networks after 22 years of experience in telecommunications. Moffat has held various executive level positions with GST Telecom.

[ISP-Planet] What happened in the marketplace to eradicate predictions of prosperity and achievement for DSL providers? What contributed to the turn of events?

[Moffat] Investors got nervous. Whenever you're doing an infrastructure rollout—if you go back and look at wireless and cable TV—there's a natural shakeout that occurs, a shakeout and consolidation.

We're entering that shakeout and consolidation phase now. NorthPoint mentioned they were coming out in a restructured manner. It will be very interesting to see who comes out with them—and at what valuation—and how it all works out.

There are going to be winners and losers. You got a whole bunch of people that jumped in—kind of like a gold rush. A whole bunch of people came in and staked their claims. Some folks didn't operate well, or they were unable to create value, or they got squeezed—like the situation with NorthPoint. They made a big deal [merger proposition with Verizon] and it didn't come to pass, through no fault of their own.

It doesn't mean that there isn't gold 'in them thar hills.' You know, there is broadband gold and you know that there are going to be some solid winners that come out of this. We're seeing a lot of folks in our markets wither or go away altogether. You know—a lot of the folks that jumped in after us and perhaps had funding or operating problems. That just diminishes our competition and makes it easier for us.

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