NorthPoint network to go dark--now

A deal that would have kept a large portion of NorthPoint’s digital subscriber line (DSL) network operating for another 30 days fell apart today, when an ISP coalition led by Telocity balked at an 11th-hour demand for a significant increase in the funding that had been negotiated.

About $2.7 million dollars had been raised by the coalition, which was to make $2.4 million of that amount available to NorthPoint and its creditors. Telocity was hoping to buy enough time to switch its customers who are connected to NorthPoint to other last-mile carriers with which it has relationships, including Pacific Bell, Verizon, Southwestern Bell, BellSouth, and Rhythms Netconnections.

“The good-faith negotiations broke down after NorthPoint and its bankers significantly raised the price at the very end,” said a Telocity spokesman. “The increase was significant enough that the coalition rejected it out of hand.”

While it’s possible that NorthPoint’s creditors may have become greedy in an attempt to minimize their losses, one analyst believes AT&T, which just bought the beleaguered DSL provider’s assets, may have contributed to this latest twist in the saga.

“There’s clearly some real resistance to easing the transition, which doesn’t seem to make that much sense,” said Adam Guglielmo, DSL analyst for Telechoice. “Even if AT&T wants to do a more retail-oriented service where they are the ones selling the service, why didn’t they at least try to [say to] customers, ‘Hey, we’ll keep you on and switch you over’?

“Maybe they’re prevented from doing so by the DOJ (Department of Justice) or the terms of the bankruptcy settlement. But AT&T coming in and buying [the assets] raises a significant amount of questions.”

Oddly enough, even if the Telocity-led coalition had blinked, it may not have mattered, according to Guglielmo.

“They said that, even if they were given the money, they wouldn’t be able to guarantee the service quality over the last month,” he said.

Telocity has offered one month of free service to any of its customers who had a line installed by NorthPoint and has established a dedicated toll-free number and a special Web site (www.teleocity.com/northpoint) to assist those customers.

Despite its best efforts, Telocity probably will be hurt by NorthPoint’s network abruptly going dark, claims Guglielmo.

“Honestly, I think they’ll probably lose some customers,” he said. “If my service is down for two or three weeks … I’m going to be kind of upset by that.”

Telocity has indicated that the transition period for switching customers to another last-mile carrier will average three weeks.

“We’re looking to make this as fast a process as possible,” said the company’s spokesman.