DSL

NorthPoint Puts On A Happy Face—continued

Slap on a happy grin

"We are working hard to insure that there is no interruption in service to our existing customers and are adding new customers," she said.

Despite the problems and the bitter feelings between NorthPoint and Verizon, the companies continue to make the most out of the strained relationship.

"We continue to rent colocation space from them (Verizon) on a commercial basis, as we have for a few years," Fetters said. "We also rent local loops for each end-user from them. Then there are some extraneous bills that we pay all of the ILECs, Verizon included."

She added, however, that all long-term commercial or strategic agreements with Verizon effectively ceased on the day the deal was terminated. Since then, Fetter has not had any personal interaction with Verizon at any level.

Instead of rolling over and playing dead, Fetters said NorthPoint is moving forward and aggressively adding new customers. Its main focus is on serving small- to medium-size businesses.

From Fetters point of view, the Baby Bells are eating up the residential market so fast that it's almost impossible to compete with incumbent carriers anymore.

"The ILECs are already servicing almost all the residential customers and they certainly have the deep pockets to make a go of it," Fetters said. "Just look at the numbers, I think SBC has reached the million customer mark, or will very soon will.

"We've only surpassed the 100,000 customer mark. In this business, it's absolutely critical to have scale—and that's in millions of customers—to reduce costs. If the ILECs don't completely own the entire residential market, they at least have a lion's share of the customers."

But that still leaves the business service segment up for grabs and it's this space that Fetters sees as NorthPoint's salvation.

"Historically, the ILECs have not served that market very well," Fetters said. "They also have the problem with eroding their T-1 business. Nearly two-thirds of our installed base is small business. That's been our sweet spot and I think it will continue."

And if you're feeling cross and bickerish
The one weakness incumbents continue to exhibit is what Fetters characterizes as poor customer service on the part of the Baby Bells—which is both a blessing and a curse.

On the one hand, NorthPoint and other CLECs pickup business when disgruntled clients flee substandard customer services as provided by the Bells.

On the other hand—let's call it a backhand—the same strained customer relationships impacts data CLECs like NorthPoint, when it comes to fulfilling their own operational goals.

"In general, the ILECs provide crappy service," declared Fetters. "None of the ILECs have consistently met the performance for providing local loops as outlined in our interconnection contracts.

"It's a very monopolistic attitude," she added. "When you have a monopoly and people don't have a choice, you get accustomed to doing what you want, when you want."

Fetters also doesn't see any indications that the Baby Bells are making serious efforts to clean up their act.

"I see no evidence that there is a concerted effort to improve," she said. "None of the ILECs have told us they have an initiative to do that."

So spread sunshine all over the place
Despite crappy service from incumbents, non-payment by clients, and Verizon's fickle financial schemes, NorthPoint is still standing. The scrappy DSL provider seems determined to pull itself out of the financial mire.

Armed with some $38 million dollars in financing, a happy and healthy customer base, and a positive attitude—NorthPoint is not going quietly into the night.

Fetters said the company remains optimistic about its future.

"In addition to the debtor-in-possession financing, we have cash on hand that will allow us to run for the next few months," she said.

"Operationally, the business is stronger than ever and we continue to improve. I think with a little luck we will be able to pull out of this thing in a couple of months."

— End

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