In May of 2001, AT&T spent $135 million to buy the assets of failed DSL provider Northpoint Communications, and spent millions more upgrading the network. Shortly afterwards, AT&T found themselves wishing they'd read the fine print of an agreement between themselves, Cox, and Comcast cable, which prevented them from offering broadband in territories served by those two companies. What originated as an attempt to provide DSL service that could compete with the incumbent bells, resulted in little more than a sloppy experimental waste.

When AT&T this week announced that they would be eliminating 3500 (primarily managerial) positions, analysts weren't surprised; the long distance price wars have resulted in more than their fair share of digital bloodshed. AT&T has laid off 10,000 employees in the past two years.

What surprised many was the announcement that the company would be taking a $240 million charge against fourth-quarter earnings; the charge standing as a public acknowledgement that the company had made a mistake with its Northpoint investment. All the same, investors weren't phased. Shares of AT&T were almost unchanged on the day of the announcement, closing at $27.48, down 18 cents.

AT&T witnessed early on that operating a DSL network wouldn't be easy, as Northpoint customers unleashed a stream of acidic e-mails at the company when they began experiencing outages shortly after the asset acquisition in 2001. The company was now the proud owner of nationwide collocation facilities, two leased buildings in Emeryville, Calif, and tons of equipment and software....and quickly realized they wanted no part of any of it.

So instead of trying to break into the DSL business on their own, the company announced this week they'd be expanding an existing agreement with Covad, offering DSL service across Covad's nationwide network, which covers 96 of the top metropolitan areas. AT&T will continue to offer services provisioned over their own facilities in limited areas of New York, Texas and California.

A $135 million investment, millions in upgrades, months of paying leases for shelf-space that was never even used.....all that remains is dusty abandoned hardware sitting on central office shelves, the final will and testament to the company that was once Northpoint Communications.