DSL Shutdown Shuts Out Businesses

By SmallBusinessComputing Staff | Posted July 01, 2001
by William C. Gillis

In late March, NorthPoint Communications suddenly shut down its nationwide DSL network, leaving over 100,000 consumers and businesses stranded without high-speed Internet access. Considering the instability of the DSL market, business owners should be wary of other providers meeting NorthPoint's fate.

Businesses victimized by the shutdown included New York City-based Midtown Air Conditioning, which used NorthPoint service through its Internet service provider, @Work. "I was warned only four days before service went down," says Erik Khayut, Midtown Air's telecommunications manager. @Work quickly set up dial-up service, but Khayut was forced to wait over three weeks before new DSL service was installed and operational.

According to Greg Falconer, director of dial and DSL products with Verio, a nationwide ISP that contracted with NorthPoint, it can take anywhere from two to six weeks before new DSL service can be be up and running. "The physical and technological factors of transferring a DSL line means it's not going to happen fast," Falconer says.

The trouble started in January, when NorthPoint, a DSL wholesaler, filed for bankruptcy. It repeatedly assured its ISP partners that the network was not in danger. NorthPoint sold its assets to AT&T in March, but AT&T chose not take on NorthPoint's customers.

Verio, like most of NorthPoint's ISP partners, was finally informed about the shutdown only a few days before it occurred. "We received every assurance from NorthPoint throughout their bankruptcy proceedings that their DSL network would be secure and a suitor would purchase the system and the customers," Falconer says. Verio set up customers with temporary dial-up service until new DSL service from EarthLink could be installed.

Other DSL wholesalers, such as Rhythms NetConnections and Covad, also have had severe financial difficulty. According to Ben Macklin, senior analyst of broadband and wireless at eMarketer, an Internet research firm, the "Baby Bells" (such as Verizon, Pacific Bell, and SBC Communications) and AT&T can maintain a network and provide service directly to a large number of customers, handle customer service, as well as withstand losses wholesalers can't weather. "The DSL market is in a state of flux," Macklin says. "The safest bet for small business owners, at least in the short- to-medium term, is to go with ISPs that partner with the Baby Bells."

Despite their long-term reliability, the Baby Bells do have their shortcomings. Midtown Air's Khayut has experienced problems with Verizon's network and its customer service. "Sometimes Verizon doesn't work," he says. "And they don't care, because they have so many customers." Khayut worries that the Baby Bells will monopolize the market, leaving DSL users with "no one else to go to, despite all the customer-service problems."

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