NorthPoint has been operating under Chapter 11 status since early last year. In a statement released by the company, a spokesperson said NorthPoint is now taking immediate steps to take down service.

by internetnews.com [March 30, 2001]

After a series of high profile stock drops, lawsuits and an eventual buyout by AT&T, representatives at NorthPoint Communications officially announced late Wednesday that the company has been forced to shut down its DSL network after efforts to secure funding for interim operations failed.

NorthPoint has been operating under Chapter 11 status since early last year. In a statement released by the company, a spokesperson said NorthPoint is now taking immediate steps to take down service.

"NorthPoint advises its customers to expect network outages and termination of DSL services immediately," read the statement. "[We] urge customers to contact their Internet Service Providers directly for additional details regarding future service."

Representatives at the company would not comment further on the closure.

NorthPoint's demise has sent ripples throughout the DSL marketplace, with most pundits seeing the AT&T buyout as a clear boost to Ma Bell's quest for dominance in the broadband arena. Many big name ISPs have utilized NorthPoint's network to carry their services, most notably Telocity and Microsoft's MSN, the latter of which announced just last week that it would be unable to provide subscribers with the MSN DSL service because it can no longer gain access to NorthPoint's network.

Chain reaction
Internet service provider reaction to Thursday morning's announcement by NorthPoint Communications left little room for doubt about their feelings.

In a letter to ISPs Thursday morning, Liz Fetter, NorthPoint president and chief executive officer, said because they couldn't get funding, shut down was imminent.

"At this point it is clear that NorthPoint no longer has funds available to finance the continued operations of our network. As a result, I am hereby giving you notice that the cessation of services to our partners and subscribers and the complete shut down of our network will commence today."

Reportedly, talks stalled when NorthPoint financiers asked for more money to fund continued operations.

Robert Marsh, chief executive officer of Texas-based Everyone's Internet, said the ISP coalition did everything it could, and was sabotaged by greedy bankers.

"NorthPoint and the banks could have made it different," Marsh said. "The ISP coalition had put $2.4 million in an escrow account with instructions that it could have been released yesterday, but the banks and NorthPoint came back and demanded more and more and more money. They more than doubled and tripled the amount of money they were seeking from the ISPs."

Because of NorthPoint's actions, DSL subscriber losses will exceed a couple thousand despite the incentives the ISPs are offering to keep customers with them. They include free dial up service up to six months and keeping the 10MB of Web space and all their email address.

QoS foible
Another bone of contention for ISPs was the data exchange carrier's refusal to guarantee the quality of service for its customers.

"In addition to that, where they had given us assurances early in the negotiations, they sent us a document which basically said, 'we give you no assurances or guarantees that once you pay this money what or if any part of the network would stay up, there would be no truck rolls, no technical support, if a part of the network went down it would never come back up," Marsh said.

"In the end the banks just said, 'see ya,' and NorthPoint did the same thing," Marsh continued. "In my personal opinion, those companies had a moral and ethical, if not legal, obligation to negotiate in good faith with the ISP coalition to protect these consumers."

Not everybody was as forthright in their opinions of the actions taken by NorthPoint and its creditors.

A spokesperson for ISP airface.com in Florida was curt, saying the only information they were getting came from the press releases that NorthPoint sends out on the newswires.

For the moment, however, operations continue. Customers at both airface and Everyone's Internet are still getting DSL service. The only question is how long, and if they'll get any warning before it actually shuts down. Rumors of a shutdown have been persistent, and common network outages have sparked panic from NorthPoint customers who think the end is here.

Wednesday night, Marsh said, NorthPoint customers in West Coast states like California and Washington thought their service was down for good after a likely outage at the central offices of one of the telephone company's in the region.

NorthPoint officials were not available for comment.

—End