NORTHPOINT STRUGGLES TO MEET CAL. PUC ORDER
NorthPoint “reached out” to its ISP customers Mon. to see whether there was any way to provide interim service to consumers in wake of Cal. PUC order to do so but “we don’t want to inflate anyone’s hopes,” NorthPoint attorney Michael Olsen said. Cal. PUC, which on Fri. ordered NorthPoint to continue service to Cal. customers for at least 30 days, understands company’s situation and “I don’t think it wants us to do the impossible,” Olsen added. NorthPoint is operating on skeleton staff, already has disconnected many of its customers and is nearly out of money, he said. Cal. PUC restraining order, along with other efforts to delay NorthPoint’s demise, are aimed at giving customers more time to find new service providers.
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Consortium of ISPs tried in late March to come up with interim rescue strategy but failed, Olsen said. In light of PUC order, NorthPoint on Mon. contacted ISPs and asked whether they could try again. ISPs have been trying to convince NorthPoint’s vendors, including Bell companies, WorldCom, Qwest, Level3 and others, to forgo payment temporarily. Olsen said vendors haven’t been paid for a week. NorthPoint acts as DSL wholesale provider for ISPs that in turn sell DSL services to consumers. NorthPoint, which is data CLEC, depends on vendors’ networks to complete its services. PUC order urged ISPs to try to convince vendors to keep service in place temporarily.
PUC order “presents a unique challenge to us,” Olsen said. “We have made it clear that we have no funds and are in default to network service providers.” PUC action, in response to requests by Cal. ISP Assn. and XO Communications, applies to 40,000 NorthPoint customers in state. Company had 60,000 customers elsewhere in country. Washington attorney Chris Savage said regulators could issue legally binding orders “irrespective of money” but it might take action by bankruptcy court to set aside money for Northpoint to meet order. PUC powers in such cases vary from state to state, he said.
Verizon said it would maintain connections to NorthPoint system at no cost for time being. It said its action would give customers time to switch to another service without being without any service. Verizon’s action basically keeps loops in place to make transition to another vendor easier but it doesn’t do anything to continue NorthPoint service, which also is dependent upon backbone and transport services. Other telecom companies have made varying responses to problem. Telocity announced it would provide all of its customers who had lines provided by NorthPoint free dial-up access until their DSL service was operational again. BellSouth said Mon. it would make it easier for businesses stranded by NorthPoint outage to move to BellSouth service. Special toll-free number was set up to handle calls. BellSouth said it also geared up to act quickly on requests by ISPs, CLECs and other wholesalers interested in reselling BellSouth DSL service in lieu of NorthPoint. Covad said it had signed up 10,000 former NorthPoint customers and had about 15,000 more under Covad’s Safety Net for NorthPoint Users program. Program that started March 23 lets NorthPoint users be connected to Covad with modem trade-in and without having to pay for installation.
Meanwhile, Rhythms NetConnections said it hired investment banker Lazard Freres to explore “strategic and financial options” to improve its sagging financial condition. Among options that will be studied are sale of company, joint venture or partnership, debt or equity financing or restructuring, Rhythms said in 10-K filing with SEC. Filing also revealed Nasdaq had notified Rhythms it intended to delist its stock. Company reported it had enough cash and lease financing to continue operating through Jan. 2002 and continued to grow its subscriber base.