February 26, 2001, 3:11 PM — ALTHOUGH DEMAND for broadband is at an all-time high, this week saw further evidence that the DSL marketplace is in crisis when Covad Communications shut off service to two ISPs late in paying their bills.
The move immediately sparked a potentially nasty lawsuit, which was dismissed the next day. However, the incident was declared yet another black eye for the ailing industry. Just last month, DSL provider NorthPoint Communications fell into Chapter 11, and Rhythms announced layoffs
The most recent flare-up involved Covad's decision to sever broadband connections running out to customers of DSLnetworks and Internet Express, leaving unsuspecting users in the lurch. The two ISPs had fallen behind in payments to Covad and apparently could not come to a resolution on how to get current.
Covad sells high-speed Internet connections to more than 250 ISPs. In October, Covad announced that a number of the ISPs were having trouble paying their bills, which was straining Covad's revenues.
"We are in a position right now where we need to make smart business decisions that will get us to profitability. Unfortunately, we can't fund other people's businesses," said Covad representative Suluh Lukoskie.