MSN Looks For DSL Provider With a Backbone

Microsoft Network officials, once bitten
and twice shy with the potential loss of its 7,000 broadband digital
subscriber line customers, said they are looking for a broadband provider
with its own infrastructure to sign its next deal.

Last week, AT&T Corp.‘s consumer division
bought NorthPoint Communication‘s
physical assets for $135 million, a move that will strand more than 100,000
DSL customers in the near future. AT&T has already signaled it will not
take the customers when it takes NorthPoint’s equipment.

MSN users account for about 7,000 of those NorthPoint customers.

MSN finds itself in a bind. Last year the ISP arm of Microsoft Corp., a $30 million investor
in the now-defunct data competitive local exchange carrier (DLEC), pinned
its broadband hopes on the provider, in hindsight a move that now comes back
to haunt them.

Until now, MSN’s only foray into broadband had been with its satellite
Internet access offering, a niche market that hasn’t taken off.

It’s hopes to migrate many of its more than 3.5 million dial up customers is
now in jeopardy, prompting officials to make sure it signs a new deal with a
company that won’t fold under years down the road.

According to an MSN official who wished to remain anonymous, talks are
underway with broadband providers that own the backbone DSL service is run
on and not rely on a reseller.

“MSN is committed to providing a broadband solution to its consumers and has
been in discussions with various providers, but we don’t have anything to
announce,” the official said. “Based on market volatility and general
difficulties with the DSL market, MSN will primarily be working with
companies that own their own broadband infrastructure.

The spokesperson declined to name any of the companies it entered talks
with, but its indication to stay with backbone owners narrows the field

The major backbone providers in the U.S. providing broadband service are
incumbent local exchange carriers like Verizon Communications and Qwest
Communications. A relatively small number of CLECs have the reach to
provide more than regional support for DSL service.

It’s a decision that effectively rules out other DLECs like
Rhythms NetConnections and Covad Communications, companies that
provision its DSL lines from the telephone companies.

Broadband providers on both sides of the fence aren’t talking about the
status of any talks with MSN at this time. At any rate, existing broadband
providers are taking advantage of NorthPoint’s imminent departure to garner
the soon-to-be-bereft customers.

According to Kevin Belgrade, SBC spokesperson, the company does not discuss
the status of talks with any companies it might do business with, but is
busy going about DSL customer acquisition as normal.

“We’re just trying to get DSL to as many people as possible, and continue to
look at any way possible to do that,” Belgrade said. “When people call up
asking for DSL, we bring it to them.”

Martha Sessums, Covad spokesperson, said its Safety Net program, which is
running a special promotion to
lure NorthPoint customers to its service, has seen a surge in DSL signups.

“We did have more over the weekend than normal, but its a little too soon to
tell,” Sessums said. “We just put out this promotion on Friday.”

She also said Covad does not divulge the identity of ISPs it is negotiations
with, but said it would make sense that MSN officials would contact them.

So it’s a waiting game for MSN and NorthPoint DSL consumers right now.
According to the official at MSN, customers can expect the shutdown of their
service anytime in the next three to 27 days.

Customers dodged the bullet of imminent DSL shutdown after a coalition of 13
broadband ISPs led by Telocity
entered talks with NorthPoint last weekend to keep service running

NorthPoint threatened to end service Monday morning if ISPs didn’t pony up
the $2.4 million necessary to keep the lines running for another week.
While the service hasn’t been powered down, a deal hasn’t been reached yet
as both sides continue negotiations.

Bill Chandler, a Telocity spokesperson, was not at liberty to discuss the
status of the negotiations, saying only that talks were ongoing and that
NorthPoint hadn’t shut down service yet.

In a statement released Tuesday, Liz Fetter, NorthPoint president and chief
executive officer, said customers remain her company’s highest priority,
even as the DLEC continues with its bankruptcy proceedings.

“We are doing everything that we can to transition them to other providers,”
Fetter said. “At present, we do not have enough cash to continue to provide
service on our network. This may result in a termination of network
services within the next few days.”

NorthPoint officials did say they were working with the consortium of ISPs,
led by Telocity, but that no agreement has been reached.

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