DSL

DSL Prime News Analysis:
NorthPoint and Its Stranded Masses

The number of stranded subscribers rises above 100,000. AT&T purchased NorthPoint—will AT&T soon compete against itself? If you need employees with DSL skills, consider headhunting the NorthPoint staff.

by Dave Burstein DSL Prime [March 26, 2001]

"The whole team has done a terrific job in a hard time."
—Liz Fetter, CEO NorthPoint on Friday
(who sounded somewhat relieved it's almost over)

NorthPoint was a damn good company, driven by Mike Malaga's dream. Soon it will be a shell with one hope of recovery—the lawsuit against Verizon. The real problem was financing. It takes 3-5 years to build the network and acquire subscribers. Those costs must be funded. Without financing, the company is dead—no matter how good the long term prospects are.

This issue focuses on the Northpoint buyout. We'll have another issue in a few days, with the Alcatel wins (Germany, Taiwan, and China will add to their 53 percent market share), and the Pronto delays (officially, it's now 2003—a year late—and it's on hold in Illinois and much of the midwest). But we want to clarify our comments about DLCs before the March 29 hearing; the equipment vendors are ready to deliver service quality and video speed throughput at virtually the same price, now it's up to the telcos to order them. db

Editorial: Do whatever it takes to deliver service to Northpoint customers
110,000 angry consumers will hurt the DSL industry for years if they are cut off with no recourse. Whatever the legal requirements, AT&T's reputation will be damaged for taking the network down without providing for the consumers. Although Covad will gain business, Abhi Ingle calls AT&T's abandonment of customers tragic for the industry.

The burden is on the entire industry to compromise, and to work hard to deliver service. In particular, we urge the telcos to treat this as an emergency, streamline procedures, and add overtime or whatever it takes to deliver the service. Some will come to telco DSL service, and deserve priority handling; others will need the telcos to transfer lines between CLECs or deliver new ones rapidly. Cooperating in an emergency will prove competition is viable, and deregulation is possible; business as usual will only drive consumers away from DSL in general, and help the cable guys. We all know what a telco can do when disaster strikes; now is the time to call on those resources.

Justin Beech of DSL Reports joins Dave Burstein of DSL Prime in calling on everyone, especially the telcos, to help orphaned customers.

The possibly stranded customers
$7M in ISP bills
110,000 NorthPoint customers are confronting "imminent shutdown" after a court hearing approved the sale of the physical assets to AT&T, which is not willing to service customers. Some reports have things going down over the weekend, but that will probably be avoided. Rhythms is standing by, ready to do a CLEC to CLEC transfer keeping all lines live, but marathon negotiations between NorthPoint and the ISPs are holding up the "letter of agreement" necessary to transfer the lines.

The sticking point is $7M NorthPoint is due from the ISPs, much of it from service delivered after the bankruptcy filing. DSL Reports, which consistently has had excellent coverage, hears that NorthPoint is insisting on $2.4M by Monday. Rhythms, Telocity, XO, Microsoft, and the like have the funds available if they choose to advance them.

Covad and Rhythms both want the customers
NorthPoint's two direct competitors haven't been sleeping much. Rhythms and Covad have facilities in 90 percent or more of the NorthPoint COs. Both have designed programs they say will cost the consumer "little or nothing" to switch, including equipment rebates.

Rhythms was an active bidder in the auction, and and is working closely with a consortium of ISPs committed to keeping the network alive and making the transfer smooth. Brian Farley tells DSL Prime they hope to resolve everything early in the week, in time to prevent customer shut downs. Because Rhythms uses the same Copper Mountain DSLAMs that NorthPoint used, they are ready to transfer almost all the customers directly CLEC to CLEC. Farley tells us they have contacted most of NorthPoint's ISPs, and will take them on almost immediately if they have the financial strength to keep bills current.

Covad's plan includes asking users to work through the "Covad Safety Net". The will provide new lines either directly or through their ISP partners. According to Abbi Ingle, Covad teams worked untill 3 a.m., to prepare systems to serve folks rapidly. They have enough kits on hand for every NorthPoint residential customer who wants to come over to self-install. The telcos have been delivering line-shared loops in five days in most cases; Ingle believes Covad can speed the process on their end, and get folks up in much less than the usual thirty days.

Like Rhythms, Covad would like to to sign up "financially sound" NorthPoint ISPs, including smaller ones (Ingle says ISPs should directly contact Greg Skipper gskipper@covad.com or Steve Slusser sslusser@covad.com).

Copyright 2001 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

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