Broadband Office files for bankruptcy protection, cuts staff

(Telephony) Building service provider (BSP) BroadBand Office last week filed for Chapter 11 bankruptcy protection and reduced its work force by 348 positions. The company is retaining a 35-person transition team to maintain service during the reorganization.

The company stated service will continue for 30 days through the reorganization proceeding until customers can be transitioned to a new provider.

According to Jeff Moore, senior analyst, network services for Current Analysis, BroadBand Office may have fallen victim to a “build it and they will come” business plan that many BSPs have embraced.

“There was too little attention focused [by BSPs] on getting actual paying customers on the front end, clearly understanding the market and then proceeding with the buildout,” he said.

“We haven’t seen—unlike the CLEC market—any BSPs exploding in terms of growth. I can’t name a BSP that can claim $100 million in revenue. But I can name plenty of CLECs that have $500 million, even $1 billion, or more in annual revenue.”

Moore said too many companies entered the competitive space at the same time with roughly the same plans, another factor that has made it difficult for firms such as BroadBand Office to compete effectively.

“After the Telecom Act of 1996 happened, it took people two years to develop their plans, and another year to get funding, so you had this simultaneous entry of a large number of players,” he explained. “And the BSPs and the CLECs all were going to be your one-stop source for telephony.”

The BroadBand Office bankruptcy filing may be just the first in a series, warns Moore, who expects the consolidation in the BSP space to continue.

“There are a couple of strong players out there--Everest Broadband and Allied Riser are two that seem to have business plans that are better thought out than most of the rest,” he said. “But having said that, there’s no indication that either one of those are going to do extremely well in the marketplace.”