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Rhythms and Other DSL Providers Agree to Line-Sharing Deal With U S WEST

Added: (Thu Dec 02 1999)

Pressbox (Press Release) - Minnesota Customers Will Receive More Choices in the High-Speed Internet Access Market

ENGLEWOOD, Colo., Dec. 1 -- Today, Minnesotans received more choices for their high-speed Internet access services. Rhythms NetConnections Inc. (Nasdaq: RTHM - news), a North American provider of digital subscriber line (DSL)-based, high-speed Internet access and networking solutions, and other competitive providers formalized an agreement with U S WEST -- allowing customers to receive DSL services from competitors over the same telephone lines that already carry their voice services. This agreement will allow competitive providers to begin offering service in January 2000.

To start line sharing immediately, the parties agreed on interim prices -- the competitors will pay $6.05 for shared loops, and U S WEST will charge its data subsidiaries at least that amount -- until the Commission determines what the real costs are. This is significantly less than the $18.00 U S WEST is proposing and the $12.05 it is currently charging for unbundled loops. At the hearing, in which the parties accepted the interim compromise, two of the Commissioners asked why there should be any charge at all, and the Commission pledged to move quickly to determine the real cost-based charge, if any.

"We are glad to be able to move forward quickly to provide Minnesota customers with the right to choose competitive DSL services over shared telephone lines," said Jeffrey Blumenfeld, Chief Legal Officer and General Counsel of Rhythms. "At the upcoming cost proceeding we believe that we will demonstrate to the Minnesota Public Utilities Commission (MPUC) that the cost- based price should more closely resemble what U S WEST has been charging itself, which is $0.00. We are nevertheless willing to accept these interim prices to move forward quickly."

"We have enormous respect for the MPUC dedication bringing the benefits of competition to the citizens of this State," continued Blumenfeld. "We look forward to the Commission's fulfillment of its promise that U S WEST will be required to treat others as they treat themselves. Throughout these proceedings, the Commission has demonstrated its agreement with this basic question of fairness and has created a pro-competitive environment."

This agreement comes on the heels of the Federal Communications Commission (FCC)'s decision to order line sharing nationwide. The MPUC began charting an independent, pro-competitive course earlier this year.

Last May, the MPUC began investigating whether it should allow competitors to offer DSL services over the same telephone lines used by U S WEST to provide voice services.

In September, Rhythms supported the MPUC decision ordering U S WEST to work with interested parties to develop the terms and conditions necessary to operationally implement line sharing within a 45-day time limit. Earlier this month in Minnesota, within the stated time limit, Rhythms led the first successful line-sharing test between an incumbent local exchange carrier (ILEC) and a competitor, clearly demonstrating the feasibility of this technology.

About Rhythms

Rhythms NetConnections Inc. (Nasdaq: RTHM - news) is a North American provider of DSL-based, high-speed Internet access and networking solutions. Rhythms was chosen by FORTUNE magazine as one of its 'Cool Companies for 1999.' Based in Englewood, Colo., Rhythms currently serves 33 markets, covering 56 MSAs. Telecommunications services for Rhythms are provided by Rhythms Links Inc., a wholly owned subsidiary of Rhythms. For more information, call 1-800-RHYTHMS (1-800-749-8467), or visit the company's Web site at www.rhythms.com.

This news release may contain forward-looking statements that involve risks and uncertainties. Actual results may differ materially because of various risks. These risks include risks associated with the demand and competition for the services and products to be sold by Rhythms, the continued availability of adequate financing to support our activities, the timing of roll outs in additional regions, the number of potential customers who could access such services, and our dependence on third parties for services such as providing collocation and transmission facilities, providing marketing and sales efforts, and supplying and installing equipment. For an expanded discussion on these and additional risks associated with Rhythms' business, please see the documents filed by Rhythms NetConnections Inc. with the U.S. Securities and Exchange Commission.

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