No Rhythm, No Ricochet

Aug 03 2001

Today we're faced with sad stories from the crumbling edge of the once-competitive telecom market. Nationwide DSL player Rhythms filed for Chapter 11 bankruptcy protection. And Metricom, which offers the Ricochet wireless service in cities across the country, plans to shut down service and auction off its assets after going Chapter 11 a month ago.

InternetNews stuck closely to the Rhythms press release in outlining the company's plans to find a buyer, make reorganization work, or liquidate the company. Rhythms reached agreement with the holders of more than 60 percent of the company's notes, according to InternetNews.

The Wall Street Journal dug deeper into the forces behind the Rhythms filing and wrapped the story with that of a bondholder lawsuit against another broadband provider, MPower. The Journal's Ann Davis and Mitchell Pacelle focused on the ire of the bondholders backing Rhythms. A sidebar in the Journal's story linked to a month-old story co-written by Pacelle on the increasing restiveness of the junk-bond backers of telecom startups. Early in June, Pacelle and Shawn Young wrote: "In recent months, some bondholders have begun ... testing the limits of how early in the trajectory of a distressed company debt holders can pressure firms to change plans." They quoted an attorney's characterization that telecom companies "are in an environment where there isn't going to be any tomorrow. Bondholders are saying, 'The best I'm ever going to do in terms of recovery is today.'"

Writing about Metricom's plans to fold up service and auction off the company as "a going concern" or in pieces, the Journal's reporter cited an advertisement for the auction running Thursday in the selfsame Journal. We guess the Chinese wall between advertising and editorial is intact at that paper - apparently the reporter got his tip from the printed edition.

Broken Rhythms: DSL Provider Files Chapter 11
TheStandard.com

Metricom to Shut Down Ricochet
TheStandard.com

Rhythms Files for Chapter 11
InternetNews.com

Rhythms Makes Chapter 11 Filing; Bondholders Sue Mpower Holding
The Wall Street Journal

Bondholders Press Telecoms To Halt the Spending Sprees
The Wall Street Journal

Metricom to End Web-Access Service Ahead of Planned Auction of Company
The Wall Street Journal

Metricom to close Ricochet
CNET.com

Ricochet wireless service won't see rebound
SiliconValley.com