This surely surprises the early investors who focused on the competitive cost advantage of using microwave transmission as a broadband alternative to cable modems or digital subscriber lines for reaching the last mile to a customer's door. But, somehow, those investors forgot to consider the many business risks. Providers of DSL and cable modem moved slowly in their rollouts and offered maximum speeds of only about 1.5 Mbps, the equivalent of T1 speeds.
Higher speeds cost substantially more.
No wonder businesses embraced these companies. Alas, the capital and the free coffee dried up before the technology could pay off. Equity and corporate bond investors pulled back, and many previously issued bonds are trading at low-grade junk bond levels, implying that they're at risk of default. Equity investors need to remember that if a troubled company is restructuring, bondholders are in front of them in line to get a piece of the assets. Though it staved off bankruptcy with new financing, executives don't expect its operations to fund the company until 2004.