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Microsoft looks to NorthPoint for DSL

Redmond will invest $30 million in NorthPoint Communications, while other firms line up to take a stake in the high-speed digital subscriber line provider.

Microsoft said today that it will invest $30 million in NorthPoint Communications, its second stake in a high-speed digital subscriber line provider.

As part of the deal, Microsoft has committed to buying 100,000 DSL lines over the next two years.

The software giant has made a number of moves recently in the cable, fiber optic, and DSL sectors, aimed at creating a market for the company's products and increasing demand for its Internet properties.

Last month, the software giant took a similar stake in Rhythms NetConnections, a NorthPoint competitor which had a strong initial public offering earlier this month. NorthPoint is set to go public in about two weeks.

Like the Rhythms deal, Microsoft and NorthPoint will work on a co-branded MSN portal. NorthPoint will offer the revamped Web site to about 85 Internet service provider partners once it is developed.

Together the companies will develop specific high-speed programs for businesses and will work together to a create standards-based content delivery interface to help the industry create broadband-focused platforms, applications, and tools.

Also, British communications company Cable & Wireless and Concentric Network, an Internet service provider, each recently invested $5 million in NorthPoint's preferred stock, according to a Securities and Exchange Commission document filed today. Concentric also committed to buy a certain number of DSL lines over a two-year period.

The investments are another shot in the arm for both the start-up telco and the nascent broadband technology.

DSL is a technology that allows for high-speed data and Internet transmissions over standard phone wires. A primary competitor to cable modem technology, DSL has limited deployments to date. But industry executives and analysts have high hopes for DSL in the business market, if not the consumer sector.

NorthPoint, Rhythms, and Covad Communications are DSL newcomers that are targeting small and mid-sized businesses. Local phone companies such as US West and SBC Communications instead are using DSL to reach out to mass market consumers.

NorthPoint also signed a distribution deal today with Enron. The energy giant is building a fiber optic network and is set to launch ePowered Media Cast, a new video streaming service. NorthPoint will serve as one of eight initial video-cast distributors.

Earlier this month, NorthPoint also agreed to a marketing pact with Tandy, the parent company of the RadioShack electronics stores. As part of the five-year agreement, RadioShack will demonstrate and sell NorthPoint DSL service in 1,400 of its 6,900 stores by the end of 1999.

NorthPoint recently received smaller investments from fiber optic telecommunications carrier Frontier and Verio.

The company's IPO is expected the week of May 3. NorthPoint will offer 13 million shares at a range of $16.50 to $19.50 each.