DSL.net Receives Exception From Nasdaq to Proceed With Preferred Stock Financing in Connection With Investment by VantagePoint Venture Partners.

Business Editors

NEW HAVEN, Conn.--(BUSINESS WIRE)--Nov. 1, 2001

DSL.net, Inc. (NASDAQ: DSLN), a leading, nationwide, direct provider of high-speed Internet access solutions for small- and medium-sized businesses, today announced that Nasdaq has granted an exception from all applicable Nasdaq stockholder approval requirements with respect to the sale of up to $20 million of its preferred stock to VantagePoint Venture Partners.

DSL.net requested an exception from any potentially applicable provisions of the Nasdaq National Market stockholder approval requirements because it believed that any delays associated with securing stockholder approval would have seriously jeopardized the financial viability of the company. DSL.net's audit committee authorized the company to obtain and rely on this Nasdaq exception. Based on the company's current plans and projections, the investment is expected to fund DSL.net to a cash flow positive position.

Under the terms of the proposed transaction, DSL.net will sell $6 million of its preferred stock to VantagePoint Venture Partners on or about November 13, 2001. An additional $4 million and $5 million of the preferred stock will be sold to VantagePoint Venture Partners (or its assignees) in subsequent closings occurring on or after December 10, 2001 and February 28, 2002, respectively. In the case of each subsequent closing, the additional investment may be requested only by a majority of the DSL.net directors who are unaffiliated with VantagePoint Venture Partners and only if DSL.net is in compliance with its business plan. In addition, VantagePoint Venture Partners (or its assignees) has an option to purchase an additional $5 million of preferred stock. Excluding the preferred stock issuable upon the exercise of this option and assuming all closings occur, the preferred stock will be convertible into an aggregate of 83,333,333 shares of DSL.net common stock. The completion of this transaction remains subject to the completion of definitive documents and other closing conditions.

David F. Struwas, chairman and chief executive officer of DSL.net commented, "I applaud Nasdaq's decision as it allows us to forge ahead unencumbered by any unnecessary delays. I remain steadfast in my belief that this investment in the future of DSL.net is in the best interest of our stockholders and the company. The completion of this proposed financing will enable DSL.net to continue its focus on pursuing growth and providing quality Internet solutions for small- and medium-sized businesses across the U.S."

About DSL.net

Based in New Haven, Conn., DSL.net, Inc. is a high-speed data communications and Internet access provider that uses digital subscriber line technology to provide high-speed Internet access solutions to small- and medium-sized businesses throughout the United States. DSL.net allows smaller businesses to migrate their operations online and more effectively compete in the Internet economy. For more information on DSL.net, visit www.dsl.net, e-mail [e-mail], or call 1-877-DSL-NET1 (1-877-375-6381).

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, among others, statements regarding DSL.net's forecasts of financial and operating plans. These statements and other forward-looking statements are subject to a variety of risks and uncertainties, many of which are beyond DSL.net's control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. In particular, the risks and uncertainties include, among other things, (i) fluctuations in DSL.net's quarterly operating results, which could adversely effect the price of its common stock; (ii) DSL.net's unproven business model, which may not be successful; (iii) DSL.net's ability to execute its business plan in a timely manner to generate the forecasted financial and operating results, which may not be achieved if DSL.net's sales force is not able to generate sufficient sales to customers or if DSL.net is not able to install and commence service for customers in a timely manner; (iv) the completion of the sale of the preferred stock to VantagePoint Venture Partners is subject to execution of definitive documents and any necessary regulatory approvals, and is subject, in part, to the achievement of certain business objectives which may or may not be achieved and, even if all of the closings occur as currently contemplated, the funds provided may not be sufficient to get DSL.net to a cash flow positive position; (v) even if the VantagePoint Venture Partners transaction is completed, DSL.net's independent accountants may include a "going concern" qualification in their audit report on DSL.net's 2001 financial statements due to the timing of the VantagePoint investment or changing business conditions; (vi) risks associated with acquisitions, including difficulties in identifying and completing acquisitions, integrating acquired businesses or assets and realizing the revenue, earnings or synergies anticipated from any acquisitions; (vii) the challenges relating to the timely installation of service for customers, including DSL.net's dependence on traditional telephone companies to provide acceptable telephone lines in a timely manner; (viii) DSL.net's dependence on wholesale DSL providers to provide it with local DSL facilities in areas where it has not deployed its own DSL equipment; (ix) the need for DSL.net to achieve sustained market acceptance of its services at desired pricing levels; (x) competition; (xi) DSL.net's limited operating history, which makes it difficult to evaluate its business and prospects; (xii) the difficulty of predicting the new and rapidly evolving high-speed data communications industry; (xiii) regulatory, legislative, and judicial developments, which could adversely affect the way DSL.net operates its business; and (xiv) DSL.net's ability to recruit and retain qualified personnel, establish the necessary infrastructure to support its business, and manage the growth of its operations. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. DSL.net undertakes no obligation, and disclaims any obligation, to update or revise the information contained in this press release, whether as a result of new information, future events or circumstances or otherwise. For additional information regarding these and other risks faced by DSL.net, see the disclosure contained under "Risk Factors" in DSL.net's Annual Report on Form 10-K for the year ended December 31, 2000, and under "Additional Risk Factors" in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2001, each of which has been filed with the Securities and Exchange Commission.

DSL.net's authority to provide certain regulated services is held by its subsidiary companies.

DSL.net is a trademark of DSL.net, Inc.