2, Verizon settled the lawsuit for $175 million, a small fraction of what the aborted acquisition would have cost. Rhythms did not file its own bankruptcy until August 2, 2001. Its assets were picked up by WorldCom, which at that point was still booming; service continued to many of its customers. Covad filed for Chapter 11 protection two weeks after Rhythms. But as the oldest and most successful of the nationwide DLECs, its fate was different. It emerged from bankruptcy that December and continued to operate, remaining a publicly traded company with a significant market presence. One might come to the conclusion that DSL was a bad bet, that CLECs should not even attempt to compete with ILECs in this space. But that would not always be a good generalization. As with many other young industries, the earliest investors often lost out, even as the overall business grew. The largest and most visible DLECs went bankrupt, but some smaller ones, with less capital to squander, did not, and even postbankruptcy Covad benefited from the reduced competition. And the bankrupt DLECs left behind a legacy of equipment that they had bought and, in some cases, even paid for without ever opening the box. This went onto the secondary market, where surviving and start-up CLECs were able to purchase it at bargain prices. This made DSL affordable in more places, such as small-market and rural central offices where a family-run Internet service provider might have opened its own CLEC subsidiary. Some of this gear may have been sold, like a lot of other detritus from the boom, on eBay, which is one dotcom that may have actually benefited from the meltdown. Survivors Face the ILECs' Regulatory Might And SO this could have turned out to be a happy tale, at least for the CLEC sec- tor, after all. But by 2001, a new administration in Washington had appointed a new FCC, and the regulatory environment was changing. Perhaps spurred to some extent by a financial community that felt betrayed by competitive markets, the new FCC, under Michael Powe