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Gateway: ISP restraining order lifted

Web America Networks' effort to stop Gateway customers from going to another Internet service provider has failed, the computer maker says.

Web America Networks won a temporary restraining order that resulted in stopping some Gateway customers from getting onto the Internet--but the victory was apparently a short lived one.

Late today, Gateway said that actions taken by Web America Networks to block the transition to a new Internet service provider "have been unsuccessful," meaning that the Dallas County Court dissolved a restraining order preventing UUNet from providing service to customers.

Web America on Saturday won a temporary restraining order against UUNet in a Dallas County Court to stem the loss of Gateway's business to UUNet. The legal spat first became public earlier this month.

"We appreciate [our customer's] patience as we work around the clock to ensure that the transition of our customers to UUNet continues to occur as quickly and smoothly as possible," said Jim Von Holle, Gateway's director of Software and Internet Services, in a statement. "Our sincere apologies to any of our customers that may have experienced a disruption or degradation of service during this period."

As many as 160,000 Gateway customers who had already been moved over to the UUNet service may have been affected, based on subscription numbers revealed by company executives. However, the company declined to give any specific details of service disruptions caused by the legal tiff. customers reported in emails posted to newsgroups and messages sent to CNET that services such as email and newsgroup access were not functioning at least through part of the weekend, but others have apparently had longer disruptions to deal with.

"I'm using for my home Internet access, and I haven't been able to access the Internet for almost a week now," said Tin Dizdarevic of Boston, in an email to CNET today.

Web America had been providing private label Internet access for customers of Gateway's online service until the company recently switched to UUNet. Gateway said in a lawsuit filed against Web America that it had switched providers on the grounds that Web America's service was inadequate.

"This transition has not been the prettiest transition," said Jeff Weitzen, Gateway president and COO last week in a conference call with analysts. "We will lose some of [our customer] base, he predicted. Currently, the company provides branded service to 200,000 customers, of which 160,000 had been moved over to UUNet as of last week.

The ongoing fallout may wind up serving as a cautionary tale to PC vendors who are increasingly venturing outside of their core businesses and attempting to tap revenue from joint ventures.

Gateway was one of the first major PC maker to start earning revenues by offering branded Internet services. It was the first to sue because the partnership didn't work as planned.

Meanwhile, the company's reputation may be on the line. Often ranked at or near the top of vendor loyalty lists, the potential for customer backlash is now looming larger than ever if customers are too deeply inconvenienced by the transition to a new provider. Ironically, it was allegations of bad customer service on the part of Web America that caused Gateway to drop the provider in the first place.

In a suit filed in Delaware Chancery Court in Wilmington, Delaware, Gateway alleged last week that Web America, a closely held Internet service provider, failed to provide easy Internet access and email services to Gateway computer-buyers who signed up for Gateway's ISP service.

Web America had already sued Gateway in district court in Dallas, Texas on January 8. Among several allegations, Web America said in the suit that Gateway misappropriated "trade secrets" regarding the pricing and provisioning of its services by engaging in contract talks with other service providers, and that Gateway has wrongfully defamed the company's reputation.