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KPNQwest shutdown averted yet again

Peter Judge ZDNet.co.uk

Published: 14 Jun 2002 17:43 BST

Just hours before a deadline set by former KPNQwest staff, liquidators for the bankrupt service provider reached an agreement that should see the network kept online -- albeit only till the liquidators' own deadline of 30 June.

Liquidators confirmed, after the 1700 CET deadline, that the network would be kept online, probably for the rest of June, because a deal had been struck with the disgruntled former employees of KPNQwest.

The liquidators want the network kept live till the end of June in order to maintain it as an asset that is as saleable as possible. However, the staff, who have been keeping it going unpaid since they were laid off by the bankrupt service provider, demanded that all should be paid, or the network would be shut down today, effectively leaving the liquidators with a much less saleable asset.

The employees have settled for a deal which guarantees to pay 70 of them for the next two weeks -- a good deal short of the 350 they were reportedly hoping to keep.

"I think the staff were naive to make the threat, but it is very difficult for us on the outside to know what is actually going on," said Allen Timpany, chief executive of Vanco, a packaged network operator.

Like most operators, Timpany is confident that a KPNQwest shutdown, if it does occur, would have little effect on Internet performance, or on individual users who have a sensible strategy. "Users should have a conventional disaster recovery plan in place, which would also cover economic disaster at their suppliers."

Large providers like BT and Sprint are lining up to offer service to KPNQwest customers but the eventual business to be salvaged, from a network once valued at $42bn, may be small: "We have picked up tens of customers, in contracts worth tens of millions of dollars," said Chris Clark, president of carrier services at BT Ignite. "Figures of $500m have been quoted for KPNQwest's turnover but around 70 percent of that was from the parent companies, and is not business we can win. My gut feel is we are all chasing about $100m to $200m."

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