MSN Goes Backbone Shopping

MSN DSL subscribers account for about 7,000 of NorthPoint's disenfranchised users. The ISP is in a bit of a broadband bind to find a reliable DSL partner.

by Jim Wagner of internetnews.com [March 29, 2001]

Microsoft Network, once bitten and twice shy with the potential loss of its digital subscriber line customers, said it is looking for a reliable provider with its own infrastructure before signing its next broadband deal.

Last week, AT&T Corp.'s consumer division bought NorthPoint Communication's physical assets for $135 million in a move that will disconnect more than 100,000 DSL customers in the near future. AT&T already indicated it would not support NorthPoint's customers when it takes its equipment and assets.

Broadband bugaboo
MSN users account for about 7,000 of NorthPoint's disenfranchised users, so MSN finds itself in a bit of a broadband bind to support its high-speed users. Last year the service provider arm of Microsoft Corp., which made a $30 million investment in the defunct DLEC, pinned its broadband hopes on NorthPoint—a capital outlay that now comes back to haunt them.

MSN's only other foray into broadband services had been with its satellite Internet access offering, a niche market that hasn't taken off to date. The company had hoped to migrate many of its more than 3.5 million dialup customers toward its high-speed service offerings. This upselling business strategy is in jeopardy now, which prompted MSN officials to make sure it signs a new deal with a company that won't fold in a few years.

Spinal tap
According to an MSN official who asked to remain anonymous, talks are underway with broadband providers that own and operate backbones. MSN will not strike a transport deal with a DSL service that operates as a reseller, like NorthPoint, Covad or Rhythms.

"MSN is committed to providing a broadband solution to its consumers and has been in discussions with various providers, but we don't have anything to announce," the official said. "Based on market volatility and general difficulties with the DSL market, MSN will primarily be working with companies that own their own broadband infrastructure."

The spokesperson declined to name any of the companies with which it has entered into talks, but by indicating that it would opt for a partner that operations a national backbone, the field is considerably narrowed. The decision also eliminates Regional Bell Operating Companies (RBOCs) and incumbent carriers that have geographically limited service areas, like Verizon and SBC.

Opportunistic operators
Broadband providers on both sides of the fence aren't talking about the status of any talks with MSN at this time. At any rate, existing DSL providers are taking advantage of NorthPoint's imminent departure to garner the soon-to-be-bereft customers.

According to Kevin Belgrade, SBC spokesperson, the company does not discuss the status of talks with any companies it might do business with, but the ILEC is busy going about DSL users acquisitions as normal.

"We're just trying to get DSL to as many people as possible, and continue to look at any way possible to do that," Belgrade said. "When people call up asking for DSL, we bring it to them."

Martha Sessums, Covad spokesperson, said its Safety Net program, which is running a special promotion to reconnect disconnected NorthPoint customers, has seen a surge in DSL signups.

"We did have more over the weekend than normal, but its a little too soon to tell," Sessums said. "We just put out this promotion on Friday."

She also said Covad does not divulge the identity of ISPs it is in negotiations with, but said it would make sense for MSN officials to contact them.

So it's a waiting game for MSN and NorthPoint DSL consumers right now. According to MSN, customers can expect the termination of their DSL service anytime in the next three to 27 days.

Unified ISP Cavalry
Customers dodged the bullet of imminent DSL disconnection after a coalition of 13 broadband ISPs led by Telocity entered into talks with NorthPoint last week to keep services running indefinitely.

NorthPoint threatened to end service Monday morning if ISPs didn't pony up the $2.4 million necessary to keep the lines running for another week. While DSL service hasn't been powered down, a deal hasn't been reached yet as both sides continue to negotiate terms.

Bill Chandler, a Telocity spokesperson, was not at liberty to discuss the status of the negotiations, saying only that talks were ongoing and that NorthPoint hadn't shut down service yet.

In a statement released Tuesday, Liz Fetter, NorthPoint president and chief executive officer, said customers remain her company's highest priority, even as the DLEC continues with its bankruptcy proceedings.

"We are doing everything that we can to transition them to other providers," Fetter said. "At present, we do not have enough cash to continue to provide service on our network. This may result in a termination of network services within the next few days."

—End