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| DSLPrime Inside NorthPoint's endgame Date: Tue, 10 Apr 2001 09:40:31 -0400
To: news@dslprime.com
From: Dave Burstein
Subject: DSL Prime Inside NorthPoint's endgame
DSL Prime - the trade paper of an Internet community
Headlines April 9, 2001
NorthPoint endgame - from inside
"There's more to the NorthPoint story than DSL Prime reported" wrote a "well-informed source", who then helped us to the remarkable account below. He added His strong opinion. "The monopolies have won. They have broken the law and eliminated their competitors in the process. Structural separation is absolutely mandatory for this industry to succeed"
Hollywood creates magic, but so does the team from Verizon Avenue, meeting this week at the Beverly Regent Wilshire with nearly all the major studios, whom Variety reports are ready to jump on to a deal "almost too good to be true". Next job: convince Verizon management to move quickly. Apparently, some of the report - especially the quick timeframe and the order for settops - was, in fact, a little too optimistic. But the technology is ready, as Verizon is demoing in la-la land. Blockbuster couldn't deliver, but Intertainer - and the studios - are ready to step in.
Enjoy DSLcon Denver. Wish we were there.
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NorthPoint endgame - from inside
Time pressure, financial squeezes, misunderstandings, and inadequate regulatory protection of consumers doomed the last minute effort to prevent the shutdown of 70,000 NorthPoint lines. There were only eight days between the problem emerging and MCI/Worldcom pulling the plug on the network. 19 hour days were the norm for everyone involved. It wasn't enough.
Tuesday, March 20, the auction began. Nearly everyone expected a bid that would take over the network assets and the customers as well. DSL Prime previously reported several "household names" as interested, and they had been actively reviewing the possibilities under non-disclosure. The customers would have a new owner, and service would continue. As backup, Rhythms was working closely with NorthPoint ISPs, ready to assume the customers.
Wednesday, to general disappointment, no offer to take over the network was close to AT&T's bid for the collocation, equipment, and the right to negotiate with several hundred employees - but no customers. No direct Rhythms bid for the customers materialized, so instead a coalition of ten ISPs began talking with NorthPoint. But given uncertainty, NorthPoint put out a warning to customers that shutdown was imminent. Worldcom and other NorthPoint vendors were suggesting Monday at 1 was the cutoff.
AT&T had different business plans, a network oriented toward voice and data, not primarily data. The court, without specific guidance from regulators mandating maintaining subscriber service, took the highest bid on behalf of the banks and other creditors. Bankruptcy court is a brutal place, regularly making tough calls like that. By U.S. law, creditors had priority, and took precedence in any decision.
Thursday, the ISPs asked NorthPoint to suggest a limited network that would keep live most of the subscribers. NorthPoint believed the banks would allow continuing the network only if a plan could be devised that covered all network costs, and satisfied the banks on ISP receivables. . Working late, NorthPoint staff came up with a plan for 458 COs that covered 70-80% of the 100,000+ subscribers. The cost of the smaller net was estimated at $2.4M per month, but NorthPoint emphasized all costs, whatever they were, needed to be covered. The ISPs held a series of conference calls, which one participant described to us as "herding cats".
Over the weekend, ISPs came together ready to fund the $2.4M they thought would cover the network, but payment of receivables remained in question. Collectively, they owed NorthPoint over $7M, so they were asked for just a fraction of the outstanding bills.
Monday morning, NorthPoint, reported their estimates had a major uncertainty: the cost of the 1800 CO network until it could be scaled down. Backbone providers were insisting on continuing payments that hadn't been included in the Thursday calculation, to cover the full network for a two to three week shutdown period. Calculating from NorthPoint's last payments on the 20th to two weeks later when the network could be reduced, that was several weeks at $2.5M per week. The Friday estimates hadn't been that large, and many of the ISPs were startled at the increased figure.
ISPs couldn't resolve their differences on how to deal with these issues, especially rushed against a Monday 1 p.m. deadline to pay money to backbone providers, telcos for line charges, etc. There wasn't time to make a deal, even though NorthPoint and the ISPs were working together in good faith.
Wednesday March 28, Worldcom shut down circuits, ironically cutting off their own DSL customers as well. The ISPs will have to deal with the banks about the receivables, and may wind up owing much of the money anyway.
DSL Prime believes the law should prevent a repeat of this disaster for customers. The PUC has been able to get the Vitts network protected for 30+ days, and many industries, including auto insurers, are prohibited from cutting off service without notice. Less than a tenth of the AT&T payment would have kept the network alive - the law and regulations should have made that mandatory. | |
 GarageJoeU2 Rocks
join:2001-03-21
Scottsdale, AZ | "The monopolies have won. They have broken the law and eliminated their competitors in the process. Structural separation is absolutely mandatory for this industry to succeed"
How absolutely true. Now the only thing that we the people can do is jump on the bandwagon and force somebody in the government to take action. Someone to stand up and say "We arent going to stand idly by anymore while our livelyhoods are cut off for only the sake of the almighty dollar." WE ARE THE PEOPLE THAT CAN MAKE A DIFFERENCE. STAND UP AND FIGHT FOR YOUR RIGHTS TODAY!!!!!!!!
--
Matthew
Ex-Northpoint, Qwest, Covad OSP Network Technician | |
Anon
| reply to dslhell
said by dslhell:
Over the weekend, ISPs came together ready to fund the $2.4M they thought would cover the network, but payment of receivables remained in question. Collectively, they owed NorthPoint over $7M, so they were asked for just a fraction of the outstanding bills.
Doesn't that just figure... Those of us who were up to date on our payments (and even paid for the next month) couldn't afford to pony up a lot of cash, but the ones who owed Northpoint a bank could come up with a third of what they already owed.. How generous of them..
Thanks for the post none the less.. Very informative..
[text was edited by author 2001-04-10 19:05:03] | |
| I think they're playing fast and loose here -- the ISPs in the consortium were only those who were paid-up. The $7m is probably all Northpoint ISPs. | |
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