KPNQwest Breaks Its Ebone

After weeks of warnings that it might happen, the Ebone part of the KPNQwest NV (Nasdaq/Amsterdam: KQIP) network shut its doors yesterday and is expected to cease service today, according to several sources that worked at the network operating center in Hoeilaart, Belgium (see KPNQwest's Midnight Hour ).

“Security just came in and told us to leave the building,” says Iain Tweedie-Walker, who used to be employed in the KPNQwest customer service center at the facility. “I didn’t even have a chance to let the customers know what was going on. It was pretty bad.”

Tweedie-Walker and other workers at the facility had been struggling for more than a month to keep the network, which once carried about a quarter of all Internet traffic in Europe, up and running. When KPNQwest filed for bankruptcy in May, only two months after acquiring the Ebone network, all of the employees at the Belgian facility were laid off. After being rehired and then laid off again, roughly 200 people worked for free until the liquidators promised to pay 40 engineers to stay on and operate the network until a buyer was found (see KPNQwest Buys Some Time ).

Word has it that a buyer, probably British-owned InTechnology PLC, was ready to sign the deeds to the network as late as yesterday, but the banks suddenly decided to ask for an additional €20 million (US$19.7 million). At that point, the buyer backed down, and the banks decided to shut down the network.

"We believed until today that there would be a takeover,” Graham Kinsey, a systems operator at the Hoeilaart facility who was among the 40 workers who were asked to stay on, said late last night.

Ebone administrators have hired a few people to shut the network down manually today at 11 a.m. Central European time. Insisting that most of the network could have stayed up and running without supervision for at least a month, thus giving customers more time to switch to other service providers, Tweedie-Walker calls the manual shutdown an act of sabotage.

Due to the fact that many, if not all, of the alternative carriers have hiked their prices to take advantage of panicking customers over the past weeks, Kinsey claims that between 60 and 75 percent of Ebone customers still haven’t switched over to other providers. Among customers apparently hurt by a fiber cut on the network early yesterday were Cable & Wireless (NYSE: CWP), Deutsche Telekom AG (NYSE: DT), Oracle Corp. (Nasdaq: ORCL), and PSINet Inc..

While the big guys will probably weather the storm, the shutdown will likely leave many smaller customers scrambling for service.

The shutdown came on the same day as KPN Telecom, which along with Qwest Communications International Inc. (NYSE: Q) parented KPNQwest, indicated that it might be interested in buying the entire KPNQwest network, including Ebone. AT&T Corp. (NYSE: T) and Dutch venture-capital company Trimoteur dropped out of the bidding late last week. Over the weekend, Trimoteur said that KPNQwest administrators had rejected its bid of approximately $198 million for all or part of the network.

While the rest of the KPNQwest network is expected to stay up and running at least a little longer, it is expected to be affected by the shutdown of the Ebone portion.

"It’s all one IP network now,” Kinsey said last night. “Ours will be shut down tomorrow, so there will be big gaps in their network. It will definitely affect traffic.”

In the meantime, none of the workers that stayed on at the facility have received paychecks, according to Tweedie-Walker. “No money has gone into my account yet,” he says, “or any of my friends' accounts.”

Tweedie-Walker says that he, like so many other people who have been working in telecom, is planning to look for another industry to call home. “I’m going to take a month’s holiday first, and then I’m going to get out of the telecom industry." He's not the only worker leaving the sector in frustration (see Laid Off, and Leaving Telecom ).

— Eugénie Larson, Reporter, Light Reading
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