Uncertain Outcome

McCollough said, "the Texas PUC requires anybody certificated in the state to provide notice to the commission and the users with an intent to shut down. I don't know whether they've done the same for NorthPoint, but it seems to me there is a real purpose for such a requirement."

Like Getz, he doesn't know how the ruling affects the federal bankruptcy court's decision, or whether any state PUC would have the authority to delay Chapter 11 proceedings, or not.

"Unfortunately, state PUCs might not be able to do anything in the face of a bankruptcy order, I don't know the answer to that," McCollough said. "I don't know whether a state regulator can say to a bankruptcy judge, 'yes you ordered this stuff sold and the buyer is taking it away,' but we have this regulatory rule that requires people to give 60 days notice.”

"I just don't know who would win in that fight," McCollough continued, "but it's an interesting question and the states that promulgated these rules have done so for a reason, and we have seen the need for it on several occasions."

Whose rules rule?
It's a question bankruptcy lawyers feel will take center stage in many more litigation proceedings down the road. According to Elliott Cappuccio, a telecom litigation lawyer with Texas-based Stumpf, Craddock, Massey & Pulman, P.C., the situation is unique to the Internet industry. But he believes federal court rulings would have the last word on any timeline determining whether a bankrupt service provider should remain operational—if state laws mandate such requirements.

"Generally, whenever you have a company that's going through bankruptcy proceedings, the bankruptcy court will have jurisdiction over all the company's operations, including the services it provides," Cappuccio said.

"As a practical matter, there's nothing stopping a consumer or ISP from asking their particular state PUC to participate on their behalf, and I suppose that could happen," Cappuccio added. "If it did, the state PUCs would probably have to go to the bankruptcy court where the proceedings are taking place, whether that's in New Hampshire or California, and make a plea on behalf of those consumers, in this case the ISPs and DSL customers."

To do that, the ISPs and DSL customers are going to have to speak out and contact their state PUC and file a motion to keep NorthPoint's lines open.

"As a practical matter, there's nothing stopping a consumer from asking the PUC to participate on their behalf, and that could happen," Cappuccio said. "Generally speaking, though, if somebody enters a contract with someone that files for bankruptcy, then the non-bankrupt party will need to appear before the bankruptcy court for any relief it might want to obtain from the debtor."

McCollough said an enforced PUC ruling is critical for DSL customers when considering the time and money it takes the average user to get DSL in the first place. It's an expenditure that can take weeks and hundreds of dollars to complete.

What ISPs can do
ISPs cannot rely on incumbent carriers to help ensure a smooth transition for displaced NorthPoint users to new DSL providers. ILEC delays in DSL deployment are well documented and many of them have slowed their own deployment of new services as a result of current market conditions.

"It's even worse when you're talking about a broadband connection," McCollough said. "It is generally difficult to get one DSL provider to begin with. Now these users will likely have to change their modem and suffer through ILEC red tape to establish their DSL connection again."

"That takes close to 60 days, if you're lucky," he continued. "Of course, most of these people already have DSL service and I understand that it can be as simple as a programming change at the Central Office or moving the cross-connect, depending on how it was set up. I'd be hopeful that the incumbents would assist in the transition, but I don't think they have a lot of incentive to do so."

The first step, however, is getting state PUCs to consider the issue. State regulatory agencies cannot initiate a review until they receive official petitions from ISPs or consumers. Only after the petitions have been reviewed could PUCs decide whether to appeal to the federal bankruptcy court, or not.

It all comes down to who has the best case, the winner most likely setting legal precedent both for any future bankruptcy proceedings down the road and for other state PUC actions.

"That's one of the issues that has to be determined, does bankruptcy law or state law prevail" Getz asked.

While legal eagles and state regulators ponder the possibilities, disconnected ISPs and their customers that want to contact their local PUC can do so from the ISP-Planet State PUC Directory.

If you’d like to make your ISP's filing with your local PUC and comments made available to the public, send a copy of your petition to the Editors of ISP-Planet. Your ISPs comments will be posted in ISP-Planet's Letters to the Editor Orbit.

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Making Time to Broker Service Transitions from NorthPoint

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