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Yipes files for Chapter 11 bankruptcy

The start-up, a competitor of traditional phone companies like AT&T that offers cheap, fast Internet service to businesses, files for bankruptcy protection.

Yipes Communications, a start-up that offers cheap, fast Internet service to businesses, filed for bankruptcy protection on Friday.

Yipes, which had raised $291 million in venture capital funding in its first three years, filed for Chapter 11 bankruptcy protection at U.S. Bankruptcy Court in San Francisco, Calif., meaning the company can reorganize its operations while keeping its creditors at bay.

The start-up service provider competes against traditional phone companies, such as AT&T and Verizon Communications, by offering businesses more than twice the Internet speeds at half the cost.

Yipes' strategy is to take a chunk of the traditional phone companies' profits by convincing businesses to take a chance on relatively unknown carriers. But Friday's bankruptcy filing is yet another example of the difficulties start-up Internet service providers have had against bigger rivals. DSL (digital subscriber line) providers Rhythms NetConnections and NorthPoint Communications folded last year, while Excite@Home filed for bankruptcy.

Yipes, which offers service to 21 communities, including Boston, Chicago, San Francisco and Washington, D.C., will continue to offer service to its customers during the reorganization, company executives said. The company's customers include the Chicago Stock Exchange, University of Pennsylvania and the U.S. Geological Survey, a Yipes representative said.

While traditional phone companies offer Net connections through older data networks, Yipes uses Ethernet networking technology to connect businesses and service providers to high-speed optical networks in metropolitan areas.

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