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With barely a day's notice, thousands of businesses and consumers are finding themselves without Internet access after NorthPoint Communications acted on a warning issued Wednesday and began shutting down its DSL network.

NorthPoint started closing its digital subscriber line service late Wednesday, and by Friday 50 percent of its network had gone dark, according to the company.

The remainder of its network is scheduled for shutdown this weekend, it says. That will leave over 100,000 U.S. business and consumer customers without e-mail or Internet access.

Late Friday, the California Public Utilities Commission ordered NorthPoint to stop the shutdown, citing the fact that the company did not provide its customers with sufficient notice. It is unclear whether NorthPoint will (or can) comply with the order, and if such a reprieve can help customers outside of California as well.

In a statement posted on its Web site and e-mailed to customers, NorthPoint explained it had no more money to run its network and would shut it down. The company has been operating under Chapter 11 bankruptcy protection from creditors since January.

Customers Caught by Surprise

NorthPoint resells DSL service to Internet service providers, so many end-user customers were caught off guard, not realizing their DSL service came from the bankrupt company.

Affected customers are located in California, New York, Massachusetts, and Virginia, among other states, and use a wide range of well-known providers, such as Microsoft's MSN, Verio, Telocity, WinStar Communications, and @Work, a unit of Excite@Home that serves business customers.

"A significant portion of our NorthPoint DSL customers are down," says Stephanie Xavier, spokesperson for @Work. She says about 2000 of its customers will be directly affected. Microsoft says 7000 of its customers will be affected along with 3000 more waiting on DSL installations.

MSN told its customers it was looking "to strike deals with companies that own their own infrastructure rather than wholesalers." In the interim MSN says it will provide six months of dial-up Internet access free of charge. @Work is giving its customers two months of free dial-up access and is offering discounts for companies interested in purchasing T1 high-speed access lines.

Verio has offered interim dial-up access to 7000 customers cut off by the NorthPoint closure.

Customers Stranded

While ISPs are working on alternate solutions, their customers remain stranded.

"Our e-mail is down and none of us have Internet access," says Robin Greenleaf, president of Architectural Engineer, a Boston-based business. She, like thousands of other seething business owners, dusted off her dial-up modems and began scrambling to find alternative Internet services.

"We'll work around this, but this is a real pain in the neck," she says. Architectural Engineer bought DSL service from WinStar Communications.

ColorPrint, a small print shop located in San Francisco, was left in a similar spot. It lost e-mail and Net access on Thursday when its DSL provider, Verio, was cut off by NorthPoint.

"This definitely makes business more complicated," says Chris Myrick, ColorPrint employee. Myrick says ColorPrint will be switching to Pacific Bell for DSL service. It could take weeks for that service to kick in, however.

Many Bumps Along DSL Road

NorthPoint is the largest DSL provider to succumb to financial woes amid a tumultuous DSL marketplace. But its troubles are far from unique. Over a dozen small DSL providers, including Zyan, Flashcom, and Bazillion, have filed for bankruptcy. Big players like Covad Communications and Rhythms NetConnections are also on the ropes.

"DSL providers got ahead of themselves and overbuilt networks before they could turn a profit," says David Needle, analyst with DVG Research, a Boston information technology research firm. Now a lot are going out of business.

Trouble within the DSL market threatens to slow DSL growth and place roadblocks to a high-speed Internet, says Bill Thorne of the consumer advocacy group Consumers' Voice. "Businesses and consumers are getting caught in the crossfire," he says.

Meanwhile, surviving broadband ISPs are getting bigger--and raising prices. EarthLink and SBC, two major DSL providers, have hiked prices from $39.95 to $49.95. Consumers can expect more of the same as the field of competitive DSL and cable providers narrows, says David Butler of Consumers Union.

"Where competition doesn't exist, a consumer is held hostage to what is available," Butler says. In that climate, prices rise.

Telecoms and ISPs: Strange Bedfellows

Consumers are also caught in the middle of escalating feuds between telecommunications giants and ISPs. Verizon Communications sells DSL service to Covad, which contracts with small ISPs, which then sell it to consumers. Deregulation of local phone service forces these companies to work together without much financial incentive to do so.

For example, thousands of customers of DSLnetworks and Internet Express, two Covad resellers, were left without service when Covad cut their connection. Covad says it unplugged the two providers for not paying millions of dollars in bills. Now DSLNetworks has filed a lawsuit contending Covad has been calling, faxing, and e-mailing many of its 3500 affected customers, asking them to sign up for DSL service directly with Covad.

DSL Hell

Compounding problems, "DSL technology still has its fair share of bugs," says Ernie Bergstrom, Cahners In-Stat senior industry analyst. He says many DSL providers rolled out DSL service before working out the kinks.

Consumers fired back with lawsuits when installations went awry and the service went south. Between Verizon and SBC Communications, a total of six class action lawsuits related to poor DSL service have been filed.

To blame are aged copper phone lines that still need to be upgraded and tweaked to carry a DSL signal. Customers also suffer from poor phone company math: Some are mistakenly told they can get DSL service when a phone company miscalculates the distance of a home to a phone company's central office. While a home must be within 3 cable miles of the central office to receive DSL service, sometimes phone companies misjudge closeness and promise service it can't deliver.

One in four DSL connections ordered never gets installed because of order-processing and network problems, according to DVG Research. And even when you can receive service, the average time between ordering DSL and getting the service up and running is four to six weeks versus five days for cable.

SBC says that it now takes only two weeks to install DSL service. Verizon says it still takes about three weeks.

For all its shortcomings, DSL service is lauded by plenty of happy customers. The technology represents one of the most promising routes to high-speed Net access for millions of consumers out of the reach of cable modem services. The number of DSL users grew 185 percent in 2000 to 2.9 million North American users, according to Cahners In-Stat. Cable modem use grew 144 percent to 3.4 million, according to Garner Group.

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