KPNQwest struggles back after shutdown - but for how long?

The bankrupt service provider is coming back on again, after a complete shutdown on Wednesday night

Early Wednesday evening, one of Europe's largest Internet backbones, KPNQwest, was switched off, but it is now coming back online, according to operators.

The reason for the shutdown is unknown, even to staff at European subsidiaries. "We were surprised ourselves," said Thilo Huys, spokesman for KPNQwest's German operation. "(KPNQwest's network centre in) The Hague pulled the plug without informing us." The German operation found out the network was down when its monitors lit up red, said Huys.

Five hours after turning the network off, technicians in The Hague were told to turn it back on again. The company intends to keep it running for a couple more weeks, said J. Van der Klauw, responsible for the operations of the network.

"It's the intention that there will be a restart", said Van der Klauw, but it will be harder to turn it on again than to turn it off, he said. By 10.30 a.m. Central European Time, 50 percent of the network was back online, and it will all be working by 16.00pm, said KPNQwest sources.

Liquidators have so far failed to agree a sale for the network operator, a joint venture between KPN of the Netherlands and the US service provider Qwest, which went bankrupt two months ago.

Efforts to keep customers and sell the network as a going concern reached a brick wall last week when staff walked out after KPN withdrew the lifeline funding it had kept up for two months.

Although final shutdown has been averted today, it is imminent. "In many ways, there is no point keeping the network going," said a source close to the sale process. "All the customers had left; the only people using the network were KPN." Until last week, it had been hoped that a live network, with customers, would be worth more than one that has been shut down. However, the bids being received were for around 1 percent of the value that the network cost to build. "When you have reached that level, you have reached bottom. Anything you get has to be better."

KPN has played a key role in the shutdown. It appears that the operator wanted to pick up the network -- which it had helped build -- for a very low price, and applied pressure, by withdrawing its lifeline funding. The administrators called KPN's bluff, and shut it down.

German operator Teles confirmed that the shutdown had happened, but said customers were not seriously affected, although some may have had delays due to routing. After the shutdown, Teles' German subsidiary Stratos switched its connections to connections from Lambdanet and Cable & Wireless, which it had ordered in advance.

One major part of the network, the Ebone backbone, had been shut down already, and has since been sold off for a rumoured 25 million euros to European service provider Interoute. Based in London, Interoute is owned by the Sandoz Family Foundation and was previously an Ebone customer.

Although Interoute's payment, at 4 percent of the investment value was very low, it was still a bigger percentage than KPN's reported offer for the rest of the network.

A sale of the Eastern European part of KPNQwest's network has not happened yet, despite that fact that it was being negotiated before the crisis began and has been described as "imminent" several times in the last few weeks.

The sale of KPNQwest's trans-Atlantic cable has also not happened yet. "Things have slowed down," said the source.

ZDNet Netherland's Jasper Koning and ZDNet Germany's Martin Fiutak contributed to this report.


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