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Mpower to cut staff, exit 12 markets

The high-speed Internet company says it will lay off 13 percent of its staff and leave a dozen markets in an attempt to reach profitability without seeking new capital.

High-speed Internet company Mpower Communications said Friday it will lay off 13 percent of its staff and leave a dozen markets in an attempt to reach profitability without seeking new capital.

One in a string of struggling Net infrastructure companies, Mpower said its scaled-back ambitions will allow it to reach financial stability without an infusion of new cash. The lack of new capital in the market for immature telecommunications companies has already forced several out of business.

Mpower said it will pull the plug on its small-business-focused Net and telephone service in a dozen smaller markets over three months, including San Jose, Calif.; Nashville, Tenn.; Orlando, Fla.; and Jacksonville, Fla.

Customers and employees in those markets will be notified Friday, the company said. The closures will be accompanied by layoffs of about 275 people.

Mpower's news further diminishes competition for high-speed Net services in smaller markets around the United States, a trend that has given the big local phone companies new market power with regulators and Congress over the last year.

The "Baby Bell" phone companies are pressing for a bill in Congress that would lift some regulations on their high-speed Net services, arguing that this will allow them to bring more services to smaller markets and outlying areas.

Mpower will continue to operate in 28 markets around the country, still focusing on small-business customers. It said the cutbacks will allow it to reach a financial break-even point before interest and tax expenses by June 2002, without the need for new investment.