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NorthPoint Wants More Money To Stay Online

Negotiators are crying foul after lawyers from NorthPoint Communications upped the ante to keep its digital subscriber line operational, a coalition of broadband Internet service providers said Wednesday afternoon.

NorthPoint officials have threatened to cut off service to more than 110,000 customers since AT&T Corp. bought up its equipment for $135 million last week in a bankruptcy fire sale, unless ISPs could come up with $2.4 million to fund the company's DSL operations for 30 days.

It's continued bad news for NorthPoint customers who are in limbo as their ISPs try to find a way to transfer DSL service from the bankrupt company to another provider.

Broadband ISP Telocity, one of the 13 members of the consortium, said their group was prepared to pay the $2.4 million, on the condition of guaranteed service level agreements.

Ned Hayes, Telocity executive vice president and chief financial officer, said talks were proceeding smoothly until NorthPoint lawyers dropped the bombshell asking for significantly more money.

"After a week of good faith negotiations, NorthPoint and its team of bankers last night decided to significantly escalate the amount of funds necessary to keep the network up for a period of time," Hayes said. "It seems that NorthPoint's bankers want the ISPs to pay an unreasonable amount of money for the network staying up prospectively, as well as retroactively. Further, NorthPoint and its bankers have backed away from any guarantees of network performance over the next 30 days, even if the funds are provided."

While the exact amount was not released, the ISP negotiators are dismayed that officials waited a week before asking for more money.

"Members of the coalition are very frustrated," Hayes said. "We have been working in good faith with NorthPoint, the bankruptcy court, and the bankers representing NorthPoint.

"Now Telocity must explore other avenues of recourse that may involve asking the California Public Utilities Commission to intervene on behalf of the Californians affected by NorthPoint's bankruptcy," Hayes continued. "While much of the focus has been on NorthPoint, we don't necessarily hold AT&T blameless in the outcome of this situation."

NorthPoint officials have declined numerous attempts for comment on its bankruptcy proceedings.



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