Uploaded: Friday, October 20, 2000, 1 p.m.

ISP Channel to lay off third of staff

ISP Channel, the firm that provides customer service for AT&T/Cable Co-op Internet customers in the Palo Alto area, will lay off about 60 of its nearly 200 employees nationwide, ISP official Mark Heyer announced today.

Heyer, director of customer communication for the four-year-old firm, founded in Palo Alto, said the layoffs will primarily affect support staff members, including the closure of some field offices. The technical staff will not be impacted, and ISP Channel "certainly intends to continue providing services in Palo Alto," Heyer said.

A recent meltdown of service and access levels to AT&T/ISP Channel subscribers in Palo Alto is not related to the layoffs, he said. He said he didn't know how many of the layoffs would be in Palo Alto.

The layoffs, termed a "restructuring" in an ISP Channel question-and-answer sheet released Friday morning, are due to problems ISP Channel has encountered in meeting its goals in partnering with cabel operators--due to the rapid consolidation and buyout rate of cable firms nationally.

"Without a sufficient number of cable partnerships, ISP Channel can't achieve the economies of scale required to meet our business objectives," the Q&A document stated.

It said the restructuring "is in no way a reflection on the viability of the cable modem business. In fact, the popularity and growth of ISP Channel's cable modem service has surpassed our expectations. Unfortunately, though, ISP Channel's focus on providing cable modem service to smaller, and often more rural markets, has presented scalability and economic challenges far greater than those faced by the cable modem providers that are focusing on more densely populated areas."

The Q&A said that "ISP Chanel customers will see no immediate change in the service they receive"--which Heyer acknowledged may be a poor choice of phraseology for Palo Alto given recent problems.

In terms of the Palo Alto service crash, he said the "technical issues have been resolved--we kept fixing things until it went away. There were multiple problems, which were partly due to the condition of the (communication) plant and partly due to other factors."

He said AT&T has been "aggressively improving the condition of the plant," to the extent that it actually is doing an "interim upgrade" of the entire system that precedes a more extensive full upgrade it had planned.

Palo Alto Utilities Department officials had contacted top-level AT&T officers in the past few weeks, which resulted in the arrival of a new AT&T technical team, well versed in coax cable systems, in early September.

Heyer said customers will likely experience "short outages" for perhaps several weeks as technicians continue replacing old or defective pieces of equipment with new gear.

Following the sale of Cable Co-op to AT&T, AT&T assumed responsibility for technical operations and ISP Channel continued to handle customer service, which also underwent something of a meltdown during the technical breakdown period, causing the city to be inundated with complaints. Some have demanded that the city allow a second internet service provider to operate in the area.

Others have said this is a prime example of why the city needs to move toward extending its "fiber ring" out to homes and small businesses, leasing city fiber to service provider firms.