UPDATE Bankrupt NorthPoint shuts down DSL network

NorthPoint Communications., which had struggled to stay afloat for the past four months following the collapse of a planned merger deal with Verizon Communications, yesterday announced that its high-speed Digital Subscriber Line (DSL) network is being shut down because of a lack of funding.

NorthPoint said it tried to secure additional money to fund continued operation of the network on an interim basis to give its business and consumer customers time to find new DSL providers. But those efforts "have been unsuccessful," the company said. "Absent funding, NorthPoint is taking immediate steps to take down [its] service."

NorthPoint has been operating under Chapter 11 bankruptcy protection and trying to liquidate its assets since January. The bankruptcy filing came seven weeks after the company was sent into a financial tailspin when New York-based Verizon terminated an agreement that would have combined its DSL business with NorthPoint's.

Last week, NorthPoint said the US Bankruptcy Court in San Francisco had approved the sale of most of its assets to AT&T, which agreed through an auction process to pay about US$135 million to buy NorthPoint's co-location facilities as well network equipment, systems, software and some building leases.

But the deal with AT&T didn't include NorthPoint's customer base, a fact NorthPoint clarified in a statement issued Monday. At that time, the company warned that the asset auction didn't provide enough money to continue operating its network for more than a few days.

NorthPoint yesterday said it's still trying to sell the remaining assets that aren't being bought by AT&T, including its customer base. But the company, which had been operating its DSL network in 109 metropolitan areas across the US, advised customers "to expect network outages and termination of DSL services immediately."