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Around 100,000 US DSL users face losing their service next week after the collapse of talks between NorthPoint and its former DSL ISPs.

Telco monster AT&T last week struck a deal to buy most of the assets, including the equipment and network, of bankrupt DSL carrier NorthPoint. It decided not to buy the customer base.

Since then the ISPs affected by the move have been frantically trying to get customers fixed up with DSL through other carriers, while warning that time is running out.

Around 20 ISPs used NorthPoint's network to provide DSL to US customers. At the time of the AT&T announcement, around a dozen of them bandied together to try to save the service for at least a month and gain time to switch customers to other networks. Between them, they offered $2.4 million to NorthPoint to keep the DSL service going for the extra month.

But last night negotiations broke down. NorthPoint and its bankers decided to "significantly escalate" the amount needed to keep the service running, according to Telocity, one of the ISPs involved.

"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," said Ned Hayes, Telocity CFO. "Further, NorthPoint and its bankers have backed away from any guarantees of network performance over the next 30 days, even if the funds are provided," he added.

Telocity is now considering asking the California Public Utilities Commission to get involved on behalf of customers affected by NorthPoint's bankruptcy.

AT&T has not explained why it decided not to take on NorthPoint's subscribers, but the fact that the company has its own ISP, and also offers its own telephone/Internet access package, may have something to do with it.

Whatever the reason, it has put the ISPs in an awkward position. Offering to compensate customers is all very well, but those users have probably had a long wait for the service in the first place. And when they get fixed up with a different carrier they may then have to fork out for a new DSL modem (their NorthPoint one may not be compatible with another carrier's service).

Hayes today described the mood of NorthPoint's former ISPs as "very frustrated".

"While much of the focus has been on NorthPoint, we don't necessarily hold AT&T blameless in the outcome of this situation," he said.

There were an estimated 2.5 million DSL lines in the US at the end of last year. ®

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