AT&Ts consumer division, and its new CEO Betsy Bernard, want to move past the shrinking long-distance market, into more profitable arenas. The strategy took shape when AT&T purchased the assets of DSL carrier NorthPoint Communications through a bankruptcy auction for $135 million, setting the stage for broadband battles across the industry.
The sale marks AT&Ts first serious move into providing high-speed data services over existing copper phone lines. AT&T will vault into the market with NorthPoints equipment, national network and facilities.
"They will help us in our efforts to move aggressively to bring the full benefits of DSL to consumers and businesses," Robert M. Aquilina, co-president of AT&T Consumer, said in a statement March 22.
The future is unclear for NorthPoints 100,000 mostly business subscribers. In a letter to customers, CEO Liz Fetter said NorthPoint is looking for other providers to take over those accounts.
NorthPoint customers Friday were calling AT&T, demanding answers, and lighting up online bulletin boards.
"AT&T wants to offer its own brand and doesnt care about serving the other customers, and theyve basically told NorthPoint to just shut them down," said Adam Guglielmo, an analyst at TeleChoice.
AT&T is planning to split this year, with one part comprising the business and consumer services — the traditional long-distance part of the company. The beleaguered giant last week named AT&T alum Bernard to head consumer operations and cited her DSL credentials: She is credited with vaulting U S West to an early DSL lead among the regional Bells.
AT&T will have a big job catching up with the Bells in DSL deployment. The new strategy also positions AT&T to bump heads with current subsidiary AT&T Broadband, which provides high-speed Internet access over cable modems.
AT&T will also compete with BellSouth, Qwest Communications International, SBC Communications and Verizon Communications, as well as independent DSL providers including EarthLink, Prodigy Communications and Telocity.
As part of the deal, AT&T will not take over the $1 billion breach-of-contract lawsuit NorthPoint brought against Verizon, which pulled out of its proposed acquisition last fall.