Best of the ISP-Lists

Before You Throw the Switch

Members of the ISP-Sales list discuss the price of doing business as an ISP. If you've fallen behind in payments to the phone company, what are your options?

[April 10, 2001]

On the ISP-Sales list in March, MA inquired,

"I have tried unsuccessfully over the last couple of months to sell my ISP. I have gotten behind in the telco payments, and now they are close to turning off our service, which will mean a lot of upset, prepaid customers. Any suggestions?"

A number of respondents suggested that a move to an outsourced model would solve MA's problems:

[JW explained] "We just went through the same thing. We were offering dialup in-house and it just became way too expensive for the PRI lines, so we ended up outsourcing. The trick is to get all the customers switched over to the new system before your lines get cut."

[MP agreed] "Some of the residential ISPs I know basically resell a national carrier. They earn $2-3 per customer."

Other respondents noted that filing for bankruptcy seems to be the thing to do nowadays:

[MS offered] "There are companies left and right (especially tech companies) filing bankruptcy these days, and there are bankruptcy lawyers galore that can probably do some things to help you."

[LB agreed] "If you can't get one of your local competitors to buy you out, then I would take the bankruptcy option before it is too late. Believe me, I know bankruptcy is a hard pill to swallow: I have owned several successful businesses, just to lose my life savings on an ISP."

Still others warned that bankruptcy won't make the debt disappear:

[NL noted] "You won't be able to keep running your business after you file bankruptcy, because the first actions of the telcos are going to be to cut you off when they know that they may never get paid. That's what they tend to do."

[RH agreed] "All you gain by filing Chapter 11 is holding off past bills. Some creditors may decide that they won't deal with you once that happens, or they may only accept COD (it's their choice). You will still need to have a plan in place that shows you can pay off all of the old debt, usually over the next three years (sometimes five)."

[DH added] "Yes, you could file bankruptcy and you could file a plan of reorganization, but as with all bankruptcy proceedings, the secured creditors (telcos) do not have to re-affirm the debt, so it's going to be negotiation time. That's something you need a lawyer for, or at least a damn good CPA."

MP looked at the larger implications of the issue:

"I wonder if the government is going to continue to allow independents to be put out of business by being forced to compete with LECs on pricing. It seems to me that the owner of the wire should be in the wholesale-only business, or at least be forced to maintain prices that allow others to be competitive."

— End