For Brian Ardis, managing his firm's Internet access is a side project. He'd rather not spend more than 10 hours a week on it. This summer, Ardis was putting in upwards of 20, trying to keep the company running when its Internet access -and the company that provided it - disappeared.
It started when he found out that Covad Communication was shutting down its BlueStar subsidiary, which was the DSL provider for Berenyi Inc., the Charleston, S.C., architecture and engineering firm where Ardis is a structural designer.
Then, in August, Covad announced that it was filing for bankruptcy. While executives promised that customers' service would not be interrupted, business owners had reason to worry. 'We took our chances on a new company and now we see what happened,' Ardis says. But, in Charleston, BlueStar was the only DSL game in town. Berenyi would either have to return to dial-up or invest in a T-1 connection.
Berenyi's predicament has become commonplace for small businesses in the last year as Covad, Rhythms NetConnections, and other DSL providers closed or slimmed down indebted divisions and services. Northpoint was publicly reprimanded by the Federal Communications Commission for giving its customers less than 30 days notice before shutting down its service. BlueStar gave its customers a month's notice, but with no guarantees. Finding a new provider, most small businesses and DSL companies estimate, takes 45 days.
Companies all across the country were hit, and few were prepared. Berenyi and other affected businesses generally didn't see backup Internet access plans as a cost worth taking on. Another Charleston company, First Carolina Insurance, temporarily switched their service to a local telephone provider, whose service was inadequate. In Columbus, Ohio, Hadler Companies asked employees to check and write e-mail from personal accounts. None of these companies had an employee who was dedicated to IT full time - the clean-up work was done in addition to full-time jobs. In some cases, this wasn't the first Internet access provider who had left them in the lurch.
The Search for Bandwidth
At Berenyi, Internet access is about much more than the corporate Web site. Employees need to send e-mail, share images of property or construction plans with clients, and search the Web for building codes and other information. The civil engineering firm has 40 employees and hundreds of clients, including Alcoa and DuPont. Its employees have become accustomed to high-speed Internet access - which makes a demotion to dial-up access seem like a return to the slide rule.
After telling the firm's higher-ups about BlueStar's pending extinction, Ardis needed to determine a course of action. He called friends at other local businesses and talked with Berenyi's regular computer consulting firm. The choice of a new provider was complicated by the lack of alternatives in Charleston and the fact that the company would be moving to a new office in only three months. The firm's new Daniel Island offices would be equipped with a T-1 line, but Berenyi couldn't afford to go without e-mail and Internet access in the interim.
Ardis says that BlueStar's DSL had been a perfect low-cost solution to the company's bandwidth demands. Before signing on with BlueStar, it had been paying for an ISDN line through InfoAvenue.net. The firm's bills were enormous because it was paying by the minute. At $140 a month for unlimited DSL, BlueStar's service had been a steal. He now expected to pay more.
After a few days of research and a round of bargaining, Ardis found an interim provider. His firm's computer consultant was a client of a company called NewSouth Communications. Ardis then checked references with a neighboring business that was getting T-1 access through a competitor, Newvox. Ardis says he was impressed with NewSouth's sales reps and had an easy time getting them on the phone, but Newvox was offering free installation and no charge for moving to Daniel Island.
In the end, Ardis got NewSouth to agree to a free month's service if the T-1 wasn't installed by Aug. 1. The provider also agreed to waive its $250 installation charge, and charge Berenyi $250 for its move to Daniel Island, rather than the standard $2,000. For $770 a month over a two-year contract, Berenyi receives 10 voice channel lines, four data lines at speeds of 256K, seven lines that it can activate (at additional cost) if need be, and Web hosting. NewSouth, which leases lines from Bell South, also offers 2,000 free long-distance minutes a month. 'Looking at what we've been spending on long distance, local phone lines, and the whole shebang, having a T-1 is better,' Ardis says.
Companies like NewSouth look at the demise of BlueStar and others as an opportunity to drum up new Internet business. 'A lot of customers had voice services with us, and T-1 connections or DSL with BlueStar,' says Clark Easterling, director of product management at NewSouth. 'We figured this would be a good opportunity to increase our penetration in these cities.'
Though it may seem that companies like Berenyi are in a weak bargaining position, Easterling says NewSouth has been willing to accommodate companies that, after all, are giving them new business. NewSouth instructed its sales staff to offer a free month of service if a transfer couldn't be made in 30 days - exactly what it did for Berenyi. Easterling says the company picked up 22 verbal commitments in the first week.
The DSL Debacle
BlueStar happened to be the only provider in Charleston. More often, a provider goes down and even its local competitors can't help the former customers. This stems from the arcane bureaucratic processes governing the telephone lines themselves.
'There's more paperwork than there is physical labor,' admits one former BlueStar project manager and engineer, who spoke on condition of anonymity. For example, he says, a BlueStar customer that's about to lose T-1 service could turn to NewSouth. NewSouth would then request a line from Bell South, whose records might show that no lines were available - perhaps because BlueStar still had the necessary lines tied up while it shut down its service. 'Finding quality lines is the biggest problem in engineering a switch,' he says. On and on this might go, until a customer is without service for weeks.
For companies in Charleston, a T-1 line or a dial-up connection were the only options. T-1s have traditionally been considered more than most businesses need, but like Berenyi, First Carolina Insurance went with a T-1 when it faced its tough decision. BlueStar was offering T-1 access before it terminated its business; Covad does not offer T-1 connections.
First Carolina, a home and commercial insurance agency in Charleston and a customer of BlueStar, also chose T-1 service when BlueStar folded. (BlueStar was the second Internet provider that left First Carolina's 22 employees in the lurch.) The company has a server in each of its two offices, one in Charleston and another in Columbia, S.C., and had already connected the phone lines of each office through Trivergent, which allowed Charleston and Columbia employees to call each other without long distance charges. When BlueStar went down, First Carolina turned to Trivergent as a temporary solution.
Then it searched for a permanent solution. Libby Pettigrew, an accounting manager at First Carolina who also manages IT matters for the company, spent a few days talking with John Hogan, a computer consultant in Florence, S.C., and spoke to several possible providers. She was most impressed with ITC Deltacom, whose representatives and technical personnel, she said, made a good showing during in-person meetings. This was important to Pettigrew, who felt the support her company received from Trivergent was sub-par.
'We have not been happy,' Pettigrew says. 'When we have problems, we don't know who to call.' First Carolina decided to switch all of its phone service and Internet access to ITC, which resells lines from Bell South. The changes would take about a month, possibly a bit more.
Saved by the Safety Net
But when your business consists of five people, like Millennium Engineers LLC in Virginia Beach, T-1 connections generally are not worth the price. Instead of looking elsewhere, Millennium's president went through Covad's 'Safety Net' program, designed to transfer BlueStar customers to Covad in areas where the two services overlapped.
'I never lost any service, and so far I haven't had any problems,' Dennis Clark says. He said his company switched to BlueStar DSL after its previous dial-up provider, Picus, went out of business. Clark says he had no backup provider then and wouldn't find one after the switch to Covad. Clark has a cable modem at his home, but says he was reluctant to use it for his business because he fears modem speed will slow considerably once a large number of customers sign up for the service.
Rob Fortino, director of partner support at Covad, says that all transfers under the Safety Net program either have been to Covad or a reseller of Covad access. With the tangle of resellers and small ISPs that lead back to sockets provided by Covad, Fortino says customers who are about to lose Internet access often have no idea where to turn.
'A lot of it is simple confusion,' he says. 'It's hard to get people on the same page.' According to a spokesperson for Covad, the company does not offer transfer services to competitors or consulting to 'distressed customers' outside the range of the Covad network, like those businesses in Charleston, S.C. Covad recommends looking at Web sites run by DSLReports.com and 2Wire.
What the Future Holds
Though companies like Covad can often transfer customers from subsidiaries, like BlueStar, to their own services rather quickly, transferring to another provider is rarely that painless. The former BlueStar engineer says the process is hampered by a lack of relationships between the major players in DSL, and slowed by lots of paperwork. Usually, companies that suspended service provider at least 30 days notice during which businesses can sort all these problems out. But that wasn't the case when Northpoint Communications went belly up in spring.
'We were given less than a week's total notice that we were losing our service,' says Dave McKean, the corporate advertising director for the Hadler Companies, a realty firm in Columbus, Ohio. McKean, who inherited Hadler's IT problems after he helped the company launch a Web site when he was first hired, says a representative from his DSL provider, ExpressLAN, called on a Thursday to explain that Northpoint was going bankrupt. On Monday he received a second call, saying that Hadler's Internet access would be turned off by 5 p.m.
The rest of Hadler's experience hasn't done much to sell him on the future of DSL. For the next month, Hadler's employees reverted to personal e-mail accounts to correspond with clients. McKean scrambled and considered converting to cable, which he had at his home. But for the office, Time Warner's RoadRunner service was still too expensive. In the end, he ended up sticking with ExpressLAN, which sold him on ADSL supported by Ameritech, rather than the SDSL Hadler had before, at a lower price.
'I realized I wasn't going to be able to get anything any faster,' he says. 'I think a lot of the salespeople we talked to were snake oil salesmen. So I just tried to maintain a cool head. I got no random promises from ExpressLAN.' McKean said he has known ExpressLAN's representative for 25 years; without that connection, he doubts that Hadler would have found a new Internet service as quickly as it did.
After Hadler signed its contract with ExpressLAN, Road Runner dropped its price to a comparable level. If ExpressLAN goes under, McKean says, cable is the next step. Hadler employees who have access to proprietary information only have intranet, not Internet, access, and McKean says he's not too concerned about the possibility of slower speeds in the future.
'Having been burned,' McKean says, 'I wouldn't enter into any kind of ISP relationship without a couple of alternatives. And I'd be very skeptical of promises of continued, unbroken service.'
What They've LearnedCompanies hit by the shutdowns of BlueStar, Northpoint, and others had to learn the hard way, but you don't. Here are six things to help you plan for the worst, and recover should the worst happen.
Have a backup plan. Know what other options are available in your area, and which ones you'll want to call if you're looking for new service. Also inquire into the services provided by your phone provider. While, like First Carolina, you may end up with a service you're not entirely happy with, at least it will get you through the hard times.
Look for a safety net. Covad helped BlueStar customers switch to its service. It also offered a similar program for Northpoint customers who were looking for a new provider after that company shut down. But these rescue missions are also marketing campaigns, so make sure you're getting the best deal possible before you switch.
Ask for help. Ask your IT consultant, ask peers, ask competitors. Chances are, many other businesses in your area are in the same boat.
Have a point person. While you may turn to an outside contractor for advice or research, ultimately this is a decision that needs to be understood within the organization itself. This is also important when it comes time to sit down and hammer out a deal with a new provider.
Don't be afraid to negotiate. If, like Berenyi, you're willing to tie your Internet bandwidth purchase with phone services or Web hosting, a T-1 line may start to look as affordable as DSL. Also, see about cutting down or eliminating installation fees or other one-time costs. Remember, companies like NewSouth may be out there looking to make a deal.
Tom Perrotta is a reporter for the New York Law Journal.