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California regulators on Friday ordered bankrupt NorthPoint Communications Inc. to restore high-speed Internet service to 40,000 customers in the state so they can find an alternative Internet provider.
Although NorthPoint customers and Internet service providers applauded the bold move by the state Public Utilities Commission, the company said it is powerless to reestablish service.
“We certainly don’t thumb our nose at the [PUC] order,” said Michael Olsen, a NorthPoint attorney. “We don’t have the control or the means to bring [the network back] up.”
Carl Wood, the PUC commissioner who signed the NorthPoint order Friday, conceded that the state’s effort might be too late to help consumers.
But he said the order also was meant as a warning to Internet communications companies that they cannot abandon their customers, as NorthPoint did. The commission ruled that NorthPoint and other telecommunications companies must give customers at least 30 days’ notice before disconnecting them.
Similar action is being sought in Texas, and possibly in other states, according to Ned Hayes, chief financial officer of Internet service provider Telocity.
Many industry observers said the unusually swift pro-consumer stance by state regulators signals their intent to apply the same consumer-protection rules to high-speed Internet providers that now apply to local phone companies.
More than 100,000 small businesses and consumers nationwide were connected to the Internet through high-speed lines provided by NorthPoint and sold through ISPs such as Telocity and Microsoft’s MSN. The fast connections were provided through digital subscriber line technology, or DSL, a system that carries data over standard phone lines at speeds more than 25 times faster than dial-up modems.
Executives from Emeryville, Calif.-based NorthPoint said they have little hope of complying with the PUC’s directive because the company’s nationwide network is almost entirely shut down, the company has no cash to fund further operations and on Friday it laid off more than 700 employees--the bulk of its staff.
In addition, restarting the high-speed Web service would require cooperation from outside companies who are still owed money by NorthPoint and have no prospect of being paid for any further service.
NorthPoint, one of several struggling DSL companies, filed for bankruptcy in January. AT&T; Corp. agreed last week to buy certain equipment from NorthPoint but declined to take on the firm’s customers or to fund ongoing operations.
PUC Commissioner Wood said he hopes NorthPoint’s suppliers can be convinced to help restore DSL service for a short period.
He added that NorthPoint, while essentially dismantled, could still be held accountable for ignoring or defying a PUC order. The company could be fined, and the penalties could be assessed against NorthPoint’s remaining assets, such as the proceeds from the pending equipment sale to AT&T;, or against any monetary damages awarded in NorthPoint’s lawsuit against Verizon Communications.
Late last year, Verizon backed out of a deal to buy a majority stake in NorthPoint, a move that set the stage for the DSL carrier’s bankruptcy.
A group of Internet service providers had offered to fund NorthPoint’s operations for several weeks to avoid service cutoffs for their end users while other connections can be established. The temporary bailout fell through; and on Wednesday night, NorthPoint said its network would immediately be shut down.
While the earlier funding offer has already been withdrawn, several Internet service providers stressed Friday that many of them are willing to provide NorthPoint with enough money to resurrect the company’s DSL network in California--and to maintain it long enough to switch the affected customers to an alternate network.
