"Absent funding, NorthPoint is taking immediate steps to take down service. NorthPoint advises its customers to expect network outages and termination of DSL services immediately," the company said in a statement released Tuesday.
NorthPoint urged customers to contact their Internet service providers for further information regarding their online services.
Telocity, an Internet service provider serving residential consumers, led a group of more than a dozen ISPs in negotiations with NorthPoint. The talks were intended to minimize potential problems for customers as NorthPoint nears its demise.
Last week, AT&T purchased NorthPoint's assets in a bankruptcy court sale. Ma Bell plans to acquire NorthPoint's assets, forcing NorthPoint's ISP resellers to find a new DSL provider such as Covad Communications or others.
The ISP coalition said it agreed to pay $2.4 million to keep NorthPoint's DSL (digital subscriber line) network running for another 30 days. But Telocity said that after a week of negotiations, NorthPoint's bankers alerted the ISPs Tuesday that the sum is insufficient to fund the network operations for the next month. In addition, NorthPoint will not guarantee the network's operation for the next month, while the ISPs seek alternative DSL providers, Telocity said.
"After a week of good faith negotiations, NorthPoint and its team of bankers last night decided to significantly escalate the amount of funds necessary to keep the network up for a period of time," Ned Hayes, chief financial officer at Telocity, said in a statement. "It seems that NorthPoint's bankers want the ISPs to pay an unreasonable amount of money for the network staying up prospectively as well as retroactively."
An AT&T spokesperson also could not immediately be reached for comment.
The NorthPoint woes have affected the company's ISP reseller partners, sending most of them scrambling for an alternative DSL wholesaler. NorthPoint leased DSL connections to these ISPs, which in turn resold them at retail prices to consumers and businesses.
DSL.net announced a transition plan Thursday for its customers, setting up a dedicated toll-free phone number for more information about switching service to Covad Communications or other options.
Similarly, @Work, a unit of Excite@Home that serves business customers, is trying to come up with several options for about 2,000 of its customers who were affected in the New York City, Chicago, Orange County, Calif., and San Francisco bay areas, according to a representative.
Excite@Home's @Work division is offering its affected customers discounts of up to 30 percent for a fractional T1 connection or will reimburse customers up to $43.90 for two months of dial-up Internet access via America Online, EarthLink or another dial-up provider.
"We're trying to create as many options for our customers as possible," said @Work spokeswoman Stephanie Xavier. "It's a difficult situation for everybody. It's our reputation on the line; we want to do what we can for our customers. We're doing the best we can."