NorthPoint sale to AT&T leaves some users out in cold

When AT&T Corp. announced a plan to buy NorthPoint Communications Group Inc. last week, more than 110,000 DSL (digital subscriber line) users all across the United States were told they would lose their high speed Internet access. Some users have taken the announcement as business-as-usual in the topsy-turvy world of ISPs (Internet Service Providers), while others, especially those who do not have other high-speed Internet options in their areas, are less content.

Discussions about the matter are raging across the Internet at such Web sites as the open-source news site and the broadband information site Angry words, virtual sighs, petitions and the inevitable talk of class action lawsuits are common. And though some ISPs affected by the sell-off are taking harsh criticism, others are receiving praise for their transparent and active handling of the situation.

NorthPoint didn’t sell DSL services direct to end-users. Rather, the company sold access to its DSL network to ISPs, including Verio Inc., Telocity Inc., Microsoft Corp.’s MSN (Microsoft Network) and XO Communications Inc., who in turn provided services to users. NorthPoint made the decision to end DSL service due to an inability to secure the funding needed to operate its network, according to a letter posted on NorthPoint’s Web site.

Telocity announced Monday that it will offer one month of service at no charge to those Telocity customers whose DSL line goes down as a result of the sale of NorthPoint’s national DSL network. It also initiated discussions with at least 12 other ISPs to negotiate a deal to keep NorthPoint’s network active until all customers can be switched to other last-mile providers, creating a kind of NorthPoint lifeboat fund in an escrow account.

Telocity is negotiating with AT&T to keep the network afloat until all the passengers can abandon ship. NorthPoint resellers are also petitioning the bankruptcy court to keep the network running until customers can be moved to new service elsewhere.

AT&T said it would acquire NorthPoint for US$135 million on March 23. The price was seen by many observers as low for the once highly valued NorthPoint, which had fallen on hard times and declared bankruptcy after failed merger with Verizon Communications Inc.

XO’s handling of the issue is “an example of how an ISP should NOT handle this type of situation,” according to a posting at the Slashdot site from a customer who calls himself “FreeUser.” XO denied knowing of any potential problems with its DSL service until its network was already non-operational, according to FreeUser.

An XO spokesman said the company has been working nonstop for two weeks to move customers out of NorthPoint’s service. And while “we’ve tried very hard to communicate with our customers,” said Todd Wolfenbarger, XO’s vice president of corporate communications, he said the situation changes hour by hour based on fluid financial issues and the movements of the bankruptcy court. “I can appreciate where a customer is on this, since it changes from moment to moment.”

He estimated that less than 20 per cent of XO’s customers have underlying NorthPoint services, but could not guess how long it would take to get them moved.

A list of frequently asked questions about the NorthPoint situation on the XO site tells users not to cancel their current XO DSL service, as they “will still be responsible for any outstanding balances on your account.” XO does, however, offer to waive set-up fees for some business customers.

The information XO provides on its Web site is more than some ISPs are offering. IBS Networks in Herndon, Virginia, has earned low marks from at least one of its users. Bruce Niblett, an IBS customer in Farmington Hills, Mich., says he paid over $400 for a one-year contract with IBS, and though his DSL connection is still active, he received an e-mail on March 23 saying that his Internet connection would be terminated early this week, giving him only the weekend to find new service.

Niblett said he hasn’t been able to speak to anyone at IBS, is angry, and wants to learn the fate of his Internet access and the balance of his payment for unused service, which he figures to be over $300. IBS, however did update its Web site Friday evening, notifying its customers that DSL outages were imminent and offering an apology.

IBS Networks itself is in bankruptcy proceedings, according to the IBS Web site — bad news for people seeking a refund for prepaid service. “We are prohibited by the Bankruptcy Court from refunding you any amounts due right now,” said a message on the site. “Due to the emergency situation with NorthPoint, we will offer all customers with a credit on their account three free months of service on a new contract.” Customers insisting on a refund will have to get in line with IBS’ other creditors.

To qualify for the three free months of service, customers would have to order new service from IBS Networks and file a credit request form. Ordering new service will take from three to eight weeks, according to IBS. A longer, more laborious process than that is not unheard of.

Customers calling IBS seeking answers are initially referred by automated message to the IBS Web site – a bitter irony for people who have lost Internet service. IBS refused an interview request.

Nibletts expressed anger at both AT&T and NorthPoint, though he was unsure that IBS was in fact his ISP, rather than either of those two companies.

This confusion as to NorthPoint’s role in user’s Internet access has led a number of users to call NorthPoint’s new owner, AT&T, with their complaints, according to June Rochford, an AT&T spokeswoman. Rochford is referring all calls to NorthPoint, since AT&T’s merger with the company is not yet complete.

“(These) customers must work with NorthPoint, as they’re still NorthPoint customers,” she said, adding that she is referring callers to NorthPoint’s Web site. The site, however, contains no information on how customers could contact the company, offering instead only a message from the company’s president and CEO, saying that NorthPoint is “disappointed and (regrets) that (it is) unable to continue to provide (its customers) with services.”

NorthPoint customers are not AT&T customers because AT&T didn’t buy their contracts, but rather only purchased NorthPoint’s equipment, according to Rochford. AT&T did this, most likely, because NorthPoint’s customers amounted to only two to

four per cent of the market, and acquiring those customers likely seemed more trouble than it was worth, said Charles King, senior analyst with Zona Research Inc. However, leaving some users without service “is not a good neighbor policy,” he said.

Users of some other NorthPoint-supplied ISPs, though, have happier tales to tell.

MSN is offering a free dial-up account for 60 days, a $25 gift certificate and a rebate if services were paid for in advance., a Texas-based ISP which has provided frequent updates on its Web site since March 22, is offering its customers a free dial-up account for six months, a waiver of early cancellation fees, free cable modem installation, the option for users to keep their DSL modems (often the property of the ISP, not the user) and is even giving out some free modems to its customers.

Despite these actions, Zona’s King is not sure that all users will return to DSL services, noting that than there are more high speed Internet access options available now than when DSL was first offered. He cites satellite, newer cable technologies and some wireless services as possibilities.

Such options, King admits, are little consolation to users such as Bruce Niblett, who has the option of paying more for DSL from another provider or going back to a slower, dial-up modem. Cable Internet, Nibletts said, is not yet available in his area, though he is likely to get it when it is. Until then, though, Nibletts isn’t sure what he’s going to do.

AT&T, in Basking Ridge, N.J., can be reached at NorthPoint, in San Francisco, can be contacted at

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