Business Lawsuit Article  

BLUESTAR TOLD TO STAY IN BUSINESS

Internet provider must stay open until companies get other access

Charleston, S.C.
JONATHAN MAZE
Jul 27, 2001

Copyright The Post and Courier Jul 27, 2001

A Charleston County judge has granted a local law firm's request for a temporary restraining order that keeps Bluestar Communications in business.

A hearing on the lawsuit is scheduled for Aug. 6.

Local attorney Mark Tanenbaum filed the lawsuit Thursday and is seeking to make it a class-action lawsuit.

The lawsuit wants to force Covad Communications to keep its Bluestar subsidiary up and running until its customers have a chance to get Internet access. Bluestar provides Internet access for 600 local businesses.

Late last month, the financially troubled Covad announced it was closing its Bluestar subsidiary. Because Covad has no overlap in service here, as it does in two-thirds of Bluestar's markets, those local businesses have to find new Internet service by Aug. 1.

Many of Bluestar's customers, including Tanenbaum, said that is not enough time. Bluestar provides high-speed Internet access through digital subscriber lines.

Installing DSL typically takes 45 to 60 days, according to Bluestar's literature. That was included in the court filing.

Thus, while some firms are scrambling to get Bluestar's old customers connected in time, many could be left without Internet access for a couple of weeks or more.

"We're scrambling to get another service provider," said Tamara Tarrance, office manager for Tanenbaum's firm. "If we'd have been given even 60 days, things would have been fine."

The California-based Covad bought Bluestar for $92 million last year. Covad decided to shut the subsidiary down to save $75 million in operating costs over the next year, laying off 400 people in the process.

Kathleen Greene, a spokeswoman for Covad, would not comment on the lawsuit. She said that Bluestar is no longer part of Covad, and that a financial management firm, Development Specialists Inc., is handling the shutdown and liquidating Bluestar's assets to pay creditors.

Greene referred comment to Bluestar's headquarters outside Nashville, Tenn., but no one could be reached for comment.

As with many companies, the Tanenbaum firm has come to rely on Internet access. Tarrance said the company receives hundreds of e- mails daily, and employees use the Internet for research.

Tarrance said the Tanenbaum firm will get high-speed Internet access through AT&T, though it could be late August before it is hooked up.

Tanenbaum entered into a contract with Bluestar on June 1, 2000. The firm wasn't hooked up with DSL access until August that year, more than two months afterward, according to court documents.

The firm found out about Bluestar's closing and service shutdown in a story in The Post and Courier on June 27 and received its official notice from the company the next day.

A lot of firms have since complained about the short notice, and other high-speed Internet providers have said they're doing their best to get the customers connected by Aug. 1.

"We are making every effort possible to get them in so they receive no interruption in service," said Marty Clark, vice president of marketing for Business Telecom Inc., a local DSL provider. "Service interruption on the Internet is a tough thing for a customer to deal with."

Jonathan Maze covers the health care and technology industries. Reach him at 937-5719 or jmaze@postandcourier.com.

Credit: The Post and Courier Staff

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