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ISPs React To NorthPoint's Imminent Shutdown

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

NorthPoint, which sold its DSL equipment to AT&T Corp. in a bankruptcy fire sale Friday, announced DSL service would be shut down immediately because of failed talks with a group of ISPs.

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.

Another bone of contention for ISPs was the data competitive local 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.



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