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Voice-over-DSL maker Jetstream closes

The top provider of voice-over-broadband technology tells its employees it cannot continue operating because of tough times in the telecom industry.

Jetstream Communications, the top provider of voice-over-broadband technology, has shut its doors because of tough times in the telecommunications industry.

The San Jose, Calif.-based company told its employees last Friday that it could not continue operating as a stand-alone business and announced the news in a posting on its Web site Monday.

"We had customers, deployments and sales, but the ability for us to raise capital became difficult and customers also cut back spending," said Steven Shaw, the company's director of marketing.

Shaw said the company employed about 240 people at its high point, but cut its work force down from 200 workers to 100 about a month ago. He would not say if workers received severance pay.

The company made VoDSL (voice-over-DSL) hardware, which expands a single regular phone wire into the equivalent of many phone lines. The technology allows customers to split their phone wire into many uses, so that part of the line can be used for a high-speed Internet connection and the remainder reserved for several phone lines.

Privately held Jetstream aimed to attract small and midsized businesses as well as home office customers with the promise that its technology would bring cost savings.

The company generated sales of more than $25 million last year, which gave Jetstream the top spot in the sector with a 30 percent market share, ahead of CopperCom and TollBridge Technologies.

Yet Jetstream's difficulties cast the fortunes of the surviving companies in doubt, because many analysts believe that equipment spending by carriers will not pick up anytime soon.

Research firm RHK said Monday that spending by carriers on wireline network gear will decline to a range between $46 billion and $51 billion in 2002 from $77 billion in 2001.

"The tough part of all this is that we're the market share leader," Shaw said.