KPNQwest's Midnight Hour
Yesterday, Belgium-based workers at bankrupt KPNQwest NV (Nasdaq/Amsterdam: KQIP), most of whom have been working without pay, threatened to pull the plug on the Ebone Broadband Services Ltd. portion of KPNQwest's network. Today, officials at the network announced that they would keep operations running for another two weeks.
According to some of the workers, things got pretty heated right before the deadline today, with about half of the nearly 200 people there demanding to pull the plug, and half wanting to keep the network running. “It was a complete nightmare,” says Iain Tweedie-Walker, who used to be employed in the KPNQwest customer service center at the facility. “It was friends against friends. At five to five, people were saying ‘Disconnect! Disconnect!’ And others were shouting: ‘If you touch this network, I’m going to knock your head in!’ ”
The announcement comes only three days after KPNQwest’s liquidators issued a statement saying they would try to keep the entire 25,000 kilometer network, which stretches across 18 countries and carries about 40 percent of Europe’s Internet traffic, running until July 1 (see KPNQwest Buys Some Time ). This plan was jeopardized yesterday when the workers that have been running the Ebone network from a facility in Hoeilaart, Belgium, for more than a week without pay or funds threatened to pull the plug if a solution was not reached by 5 p.m. CET today.
Workers there said they had been working up to 20-hour shifts, searching for creative, low-cost solutions to fiber cuts and using a diesel generator because the electricity had been cut off for lack of payment. Workers collected money for the diesel fuel when that ran low.
In the end, however, the company’s liquidators agreed to pay about 40 workers to stay on and keep the network running for another two weeks. They also paid each of the workers about €500 (about US$470) in back pay for the work they’d done over the last nine days, says Tweedie-Walker, who is one of the employees who will continue working at the facility.
When KPNQwest, loaded down with €2 billion ($1.87 billion) in debt, filed for bankruptcy at the end of May, all the employees at the Belgian facility were laid off. They were then rehired to keep the network running until a buyer appeared, only to be laid off again two days later when the receivers realized that there was no more money. More than 30 network operators, systems administrators, and others have been working for the last nine days without pay to keep the network running, while about 150 others have been conducting a sit-in in the facility. The engineers that have been keeping the network running were hoping to save the network, or at least give most of their customers time to migrate to other service providers.
The hope is that if no buyer surfaces to buy the entire KPNQwest network, one might at least want the Ebone portion of the network. The Ebone network, which carries about 25 percent of European Internet traffic, was acquired by KPNQwest in March. It has never been properly integrated into the larger network, so it could easily be bought as a separate entity, observers say.
According to reports, about 40 offers have been made for KPNQwest’s assets -- 20 of them serious, and two very serious. Graham Kinsey, a systems operator at the Hoeilaart facility who is among the 40 workers who have been asked to stay on, says the acquisition manager at Swedish Telia AB called him two days ago to inquire about key details of the network. “He sounded very interested,” Kinsey says.
The latest scuttlebutt is that InTechnology PLC, a British-owned company, might finalize a deal to purchase Ebone by next Tuesday.
If no deals go through, it is possible that the engineers at the Hoeilaart facility will decide to pull the plug on the network even before the two-week period is up. “We’re still not out of the woods yet,” Tweedie-Walker says. “If no deal goes through [on Tuesday], we might have the same scenario. And if that happens, I think the network would be shut off.”
The effects of shutting down a network of that size remain unknown. Some observers say such a shutdown would have only a minor impact, since many customers have already started moving to other carriers. Companies like COLT Telecom Group PLC (Nasdaq: COLT; London: CTM.L), British Telecom (BT) (NYSE: BTY), Cable & Wireless (NYSE: CWP), Level 3 Communications Inc. (Nasdaq: LVLT), WorldCom Inc. (Nasdaq: WCOM), and Telia have already started inheriting many of the bankrupt telecom’s customers.
Others, however, worry that a shutdown would have serious repercussions. “This is a mesh network, not a point-to-point network,” says Anthony Tilke, who was the senior manager of IP engineering at Ebone until last September. “People can guess, but there is no way of predicting what would happen if you shut it down.”
The larger clients, like British Telecom, have their own routers and won’t run into a lot of problems, Tilke says. IP customers that have been assigned IP addresses and rely on routing in the KPNQwest/Ebone network, however, will certainly feel the pain. “If any of the main nodes on the Internet are shut down, it will certainly create havoc. At best, there will be a serious reduction in quality of service.”
A shutdown will primarily affect European Internet traffic, but, Tilke says, since Ebone and KPNQwest run a lot of transatlantic lines, U.S. users might feel a pinch as well. All the U.S. embassies throughout Europe, for instance, rely on the KPNQwest subsea network.
— Eugénie Larson, Reporter, Light Reading