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KPNQwest Files for Bankruptcy
ives writes "Today KPNQwest filed for bankruptcy. KPNQwest owns the most important fibre backbone in Europe. Apparently they are not planning on switching off their network, but without maintenance it will probably slowly degrade. The official press release can be found here."
Does that mean they're spineless?
bah-dum ching!
How are they going to pay for the lines or electricity that their network runs on, to say nothing of maintenance?
Is your browser retarded?
Perhaps some US company that is looking to expand it's presence overseas (Like AOL) might buy the backbone. Just a possiblity
Tibbon
tibbon.com
This is weird: I have to read this first on a foreign website! I am Dutch myself...
I have a strong suspicion, that lack of maintenance is not the primary danger that the network would face, but rather the fact that if anyone chooses to own the network up, or do some *experimental routing* that there is nothing that would be done about it!
:D
Hacker paradise!
Is not life a hundred times too short for us to bore ourselves? -Friedrich Wilhelm Nietzsche
I keep hearing about all this unused fiber here in canada.. Wonder how much money is being lost on it.. I don't think any of the companies here will go under, most of the fiber is owned by large divers telacom /cable companies here..
EA David Gardner -"... but the consumers have proven that actually what they want is fun."
They should sell the network on ebay. I bid $1!
graspee
Perhaps that's why/how they're keeping the network up. ;-)
-WolfWithoutAClause
"Gravity is only a theory, not a fact!"http://www.theregister.co.uk/content/7/25539.html
Any sufficiently advanced man is indistinguishable from God
We need companies with thick spines to own the internet backbones - we don't want them to break!
ooops.... we went bust... sorry about your bandwidth.....
Now if only they would take Qwest with them!
Hexayurt - open source refugee shelter,
Is this in any way related to the evil phone company (errr... monopoly) here in America that is called Qwest?
in one last burst they should have the worlds largest lan party on it. largest as in it would be physically the size of the fibre network. if only for records sake.
I want 2D games back.
There's an in-depth article available in English from the German Heise.de newsticker. Read it here.
There's also a brief article on The Register available here.
Just thought I'd add a few tidbits since the news post doesn't actually link to any objective press coverage, company press releases are usually not the best way to inform oneself.
Switch back to Slashdot's D1 system.
http://www.cnn.com/2002/BUSINESS/05/31/kpnqwest/in dex.html
But this internet thing will continue to balloon forever!!!
It'll make money like crazy!
That company didn't have a good marketing plan. See, my company is going to make money off of the internet with "web banners" because that's where the real money is!
What? noone looks at banners???
oh shit.
Where did you get that quote from about them not planning to switch it off? Here's a quote from the press release:
Since this is from their own press release, of course they don't just write "we'll stop operating," but that's pretty much what the above quote says they're expecting to happen.
If you look for some more neutral information than their own press release, you might be interested in this heise online article (yes, it's an English article).
Sig (appended to the end of comments I post, 54 chars)
Fortunately that's illegal in the EU. Mostly. A US company could still take the info and sell it to other US companies.
Some people have posted asking about how they're going to pay for keeping their network up, but that most likely isn't an issue, since you don't have to be *out* of money to file for bankruptcy. What they're trying to do by declaring bankruptcy is buy some time to find additional buyers. I'm not sure whether the rules in the EU are the same, but here's how it works in the US:
In the US, the two most common bankruptcy options are to file under Chapter 11 or Chapter 7 of the US bankruptcy code. Chapter 7 filings are what you do when you realize you've irrevocably screwed the pooch, and there's just no way you are ever going to make it. Ch. 7 means you've cashed your check, game over - your assets will be liquidated (sold) to scrounge up whatever cash possible for the companies you owe money to. Everybody goes home, then the earth is sown with salt under your company headquarters.
Chapter 11, however - this is what I presume they're using the European equivalent of - means you think you can turn things around, but you can't do it just yet or you can't do it because your existing debts are too big. You can declare a Ch. 11 bankruptcy when you've still got lots of cash - that's to keep things up and running while you work out a plan to pay back your existing debts.
There's a good side and a bad side for companies filing Ch. 11 - the good side is you get to keep on going, and you don't have to pay back any debts you ran up before you filed! Most of the time, courts will rule that the companies that provide you with critical services (like power, fiber, leases, etc.) can't shut you off during your bankruptcy, even though you've just (potentially) stiffed them for zillions of dollars. This is likely what KPN is doing.
The down side is that you no longer control your company - the courts do. And they pay lots of attention to what your creditors (those folks you stiffed) ask for. Your job is to come up with a plan to pay those creditors back over time for a reasonable amount (anywhere from 10% to 80% of your orginal debt, most likely). If your creditors don't like the plan, or think that they'd get more money back by shutting you down and liquidating assets than allowing you to live and try to pay them back, they can get the courts to probably shut you down. Also, don't forget that your credit is now hosed.
So ... I wouldn't worry about KPN's lights going off anytime soon. They probably filed the EU equivalent of Ch. 11 while they had plenty of cash in the bank to keep it running while they look for someone to buy their assets (probably the only chance they have of satisfying their creditors).
"95% of all Slashdot
It's just that KPN and Qwest do not want to invest much more money in KPNQwest.
So the plan might be to just let it explode, buy the remaining assets, and start a new company.
That's a likely scenario here in Holland.
It is what happened to DAF (trucks) and other companies.
They go broke, and in the same time they start a new company with the bought assets of the old one.
Your debts are cleared, and the tax accountants aren't wanting money from you anymore.
Still I expect it would cost money to buy the assets, so if they really do not want to invest anything in that network anymore, it makes my story just a wild guess.
Well, don't worry about that. We can get you back before you leave. (Dr. Who)
In short, KPNQ was a joint venture between KPN and Qwest. Each of them owns a substantial minority share in the company. Don't know about KPN, but Qwest is a vastly bigger concern than KPNQ is.
I'd have a personalized plate on my car, but "toxic bachelor" won't fit into 7 letters.
Heise's summary in english.
Really, I'm not out to destroy Microsoft. That will just be a completely unintentional side effect. -- Linus Torvalds
Now why would this be? Let's see:
Qwest simply saw its European spam hosting plans go down the drain and called it a day... Hey, maybe those spamsupporters were right after all about the guideline being bad for the economy and all *g*
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I've read on this finnish news site that KPNQwests network will be/was shut down at 17:30 BTC, and since they are currently in daylight savings time, that should mean 16:30 UTC. The article states that the source is at www.silicon.com, however, I couldn't find the information in there right away.
In article, they also mention that the KPN's British offices will be/was shut down around midday. I'm not sure on whether this means today (Friday) or tomorrow (Saturday). Probably today, which meant that the network went down like four hours ago..
kpnqwest provided the backbone to a quite big german hoster - strato. i can remember that strato had failures twice a week and they always blamed kpnqwest and kpnqwest said they will get better... they didn't really.
too bad for the employees, tho.
"It's such a fine line between stupid and clever" -- David St. Hubbins, Spinal Tap
Recently on Slashdot there was an article complaining about the increasing costs of broadband yet the fact of the matter is that a large number of large telecoms are going out of business because they spent too much, too fast and make too little to keep up with their debts.
Global Crossing, PSINet, and STAR all bankrupt while WorldCom, in trouble and Qwest taking a several hundred million dollar loss it looks like the number of telecommunications companies is shrinking fast and it is unclear what will happen to their networks.
Not to be a contrarian, but this just goes to show that things aren't really black and white when it comes to the cost of broadband and in fact we may be getting it cheaply considering how much was spent building the networks.
>Would someone be kind enough to explain to me why
> bandwidth costs so much?
I'll take a stab at explaining it.
To produce bandwidth you must design and install a physical plant. The cabling, the routers, the HARDWARE. This physical plant is the initial investment and the assets of the company.
Bandwidth is the capacity of the pipe and is an intangible asset to be sold. Bandwidth is then divided up by the number of users or traffic on the pipe. Unused bandwidth is wasted intangible assets.
Say you've just installed a big fat fibre-optic pipe with lots of Bandwidth. Now to sell this bandwidth. With just a few users, the remaining bandwidth is wasted - why not let the current users have lots of bandwidth then? This becomes a selling point that is not guaranteed but is nevertheless valuable to get the service going.
As more users are added to the pipe, you can then scale back each user's bandwidth by capping it and begin to charge for levels of service. The original user's may be miffed but that's the way it is.
The key is to generate revenue... you have a saleable product. Create demand and then use standard business principles to determine the cost to the user based on the users desire/demand for the product. Price too high you will lose users... price too low you will not make payroll heh.
@HOME evidently did not understand this and it seems that this company Quest doesn't either.
Time will tell...
Codifex Maximus ~ In search of... a shorter sig.
This is only the Dutch KPNQwest. Several KPNQwest subsidiaries in other countries will continue their services on the EuroRings network, and at least KPNQwest Finland has promised to connect their network to another backbone is EuroRings fails.
Since you mention capping and volume limits, I'll assume you're talking about the last-mile provider. The cable and cable-modem business is the one I know the most about, so I'll do some back-of-the-envelope calculations for that. Assume for the moment that the data business has to bear all of the costs.
The first major component of the monthly bill is the cost to construct the network. Hybrid-fiber-coax, the architecture required to operate two-way services, costs about $40,000 per mile for materials and installation. A mile of plant passes surprisingly few houses on average-- call it 100 for ease of calculation. Assume 20% of houses passed subscribe to the data service, and the construction cost per subscriber is $2,000. If the company wants to get its construction costs back in five years (we'll ignore issues of interest and risk for the moment), the monthly revenue needed is $33.33. There's some head-end equipment (a cable-modem termination system costs about $30,000) but those are spread over a lot more subscribers. Call it $35/month to pay for the network itself.
Now consider other recurring monthly expenses. There's the billing system that generates monthly bills for millions of subscribers. There's the customer-care systems. There's the salaries for the people who maintain the equipment and answer the phones. There's the rent/electric/sewer/etc for the space where those people work. There are indirect costs associated with those employees-- if you have 5,000 employees who operate the network and take care of the customers, you need a personnel office, a finance office, etc. This type of cost can easily run to $20/month per subscriber.
You need connections to the larger Internet. An OC-12 (600 Mbps) connected to somebody's backbone costs about $120,000/month, and you need one of those for approximately every 60,000 subscribers. That's another $2/month per subscriber. There are a bunch of "little" costs like that, let's guess that they add up to $5/month per subscriber.
When you set out to do this on a large scale and in a short period of time, you have to borrow an enormous amount of money. The people who loan it to you want interest. Comcast is buying AT&T Broadband, with 16M subscribers (counting video and telephony subs as well as cable-modem subs) and assuming $20B in debt. With an average interest rate of 7.5%, the monthly interest payment works out to around $7.80/month per subscriber. Add all that up and you have a total of about $67.80/month.
To be honest, not all of the network construction costs should be charged to the data service, and the billing system and personnel are spread across other services as well. Even so, an allocated cost of $40/month for data service is not a bad estimate, and that doesn't include anything for profit.
Currently circulating in Holland - translated:
If you bought 1000 euro of Nortel Networks stock last year, today you'd have 59 euro.
If you bought 1000 euro of KPNQwest stock in January 2000, today you'd have 12.50 euro.
If you bought 1000 euro of Alcatel stock in January 2000, today you'd have 170 euro.
If you bought 1000 euro of L & H stock in January 2000, today you'd have 170 euro CENTS.
But if you spent 1000 euro last year on full crates of Heineken, and drank it all, today you'd have 380 euro of (bottle) deposit money.
Moral of the story: the most economically responsible solution is to sit on the couch all day watching soccer on TV with a beer in your hand.
It's "bah-dam pssshhh", dammit.
-- If no truths are spoken then no lies can hide --
...that the incremental cost of laying "extra" fibre is inconsequential. The difference between laying 1 and laying 20 is the additonal - trivial - cost of 19 strands... it's all the same hole, and it's a one-time bill.
The cost of lighting-up that same extra fibre is _not_ incremental but geometric. Each strand requires significant (and expensive) kit at either end, as well as an increasing the local copper-cable volume... which is why there is so much "excess" capacity the world over, not just Canada.
This sig left unintentionally blank.
Your gov't adds over 50% of the value of a beer in DEPOSIT fees? Holy crap, I thought $.10 was a little much!
Think outside the... Hey, where'd the friggin' box go?
Covad communications, a US based DSL provider, recently emerged from bankruptcy.
In the process, they were able to restructure their debt into equity for the most part, and reduce their operating costs.
This story brings to life an assumption I had.