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Rhythms to end service, cut 700 jobs

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CIOL Bureau
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ENGLEWOOD, Colo: High-speed Internet access company Rhythms NetConnections

Inc. said on Friday it will end service in a month and fire 700 employees, or 75

per cent of its work force. Rhythms said it sent 31-day service-termination

notices to all of its customers on Thursday evening. It said it would assist its

customers in shifting their existing digital subscriber line services to

alternative providers.

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Englewood, Colorado-based Rhythms, a provider of digital subscriber line

service over ordinary phone lines, earlier this month filed for Chapter 11

bankruptcy protection in New York, becoming the latest casualty in the battered

telecommunications market.

Companies that provide high-speed digital subscriber line, or DSL, Internet

access have been hurt by the slowing U.S. economy, heavy competition, the

inability of many customers to pay their bills and a marked tightening of

capital markets. Earlier this year, rival NorthPoint Communications Inc., which

had as many as 100,000 business customers, shut down its network and sold its

assets at fire sale prices.

Other emerging telecommunications carriers, such as PSINet Inc., Teligent

Inc., 360Networks Inc., and Winstar Communications Inc., also faced a

cash-crunch and filed for bankruptcy. Rhythms' investors included prominent

Silicon Valley venture capital firm Kleiner Perkins Caufield and Byers, software

giant Microsoft Corp. and Dallas-based buyout firm Hicks, Muse, Tate & Furst

Inc.

(C) Reuters Limited 2001.

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