NetZero Founders Form Layer2 Networks in Aggressive Move to Accelerate Broadband Deployment.

Business Editors & High Tech Writers

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Sept. 5, 2001

First Dedicated National Layer 2 Network to End Bandwidth Logjam,

Support DSL, Cable, Satellite and 3G Wireless Media

In a bid to break the bottleneck that has

stalled broadband deployment, the founders of NetZero (Nasdaq: NZRO), the world's second largest Internet Service Provider, today announced the formation of Layer2 Networks -- a new company that will create the first dedicated national layer 2 network to connect the network edge to the Internet backbone, paving the way for a rich array of bandwidth-intensive applications.

Headed by NetZero co-founder and former CEO Ronald Burr, Layer2 Networks unites the other three NetZero co-founders: Stacy Haitsuka, former NetZero CTO; Harold R. MacKenzie, former Vice President, Software; and Marwan A. Zebian, former Vice President, Networking and Communications. The four executives left NetZero in July to launch the new venture.

Layer2 Networks is a broadband IP management and bandwidth aggregation service provider that seeks to enable wide-scale adoption of high-speed, broadband technologies -- cable, DSL, satellite and 3G wireless. The company has seized a first-mover opportunity to unify a series of disparate services as a single, outsourced across-the-board solution.

Today, ISPs who choose to build a layer 2 infrastructure are forced to make a series of critical decisions -- type of broadband, where to deploy, how many users to support, etc. -- and take calculated risks, many of which never pay off. At the same time, underutilization of these layer 2 connections remains chronic. Because utilization is often limited for providers who have invested without an appropriate return, many ISPs are ailing -- and broadband deployment has failed to advance as rapidly as the industry, and the user community, anticipated.

With an eye toward creating an industry standard, Layer2 Networks will build a set of interfaces, establish a pool of dedicated connections and manage IP provisioning, initially targeting ISPs in the nation's top 20 markets. The company will simultaneously develop strategic partnerships with layer 1 and layer 3 providers.

"For too long, layer 2 has been the bottleneck halting broadband development in its tracks -- and now, we're eliminating that bottleneck," Burr said. "Broadband simply hasn't been economic, so we're getting rid of the capital risk for ISPs by creating one very robust bridge. Much like what happened in the dial-up industry in the `90s -- when ISPs migrated from regional homegrown dial networks to outsourcing service to national wholesale dial providers -- we'll spare companies from making costly and invariably redundant investments. Layer 2 support isn't a core business for ISPs, but it is for us. For ISPs, the main goal is to offer new services or new content, not waste resources on infrastructure. We're the solid, reliable, safe alternative to an unworkable status quo."

About Layer2 Networks

Based in Westlake Village, Calif., Layer2 Networks is a broadband IP management and bandwidth aggregation service provider that connects the network edge to the Internet backbone, and thereby enables wide-scale broadband deployment. The company has seized a first-mover opportunity to unify a series of disparate services as a single, outsourced solution. The company is managed by a team with a proven track record in successfully creating startups and building value for investors. Previous successes include Impact Software (sold 1998) and NetZero (Nasdaq: NZRO), IPO 1999.