KPNQwest

» see kpnqwest.com as it lived, on the wayback machine

~ the last words ~

A company can move half of a continent's internet and never appear on a screen that anybody looks at. KPNQwest did that for about two years. It sold nothing to households and advertised nowhere, and if you were in Europe loading a page in 2001 there was a decent chance your packets crossed its fiber on the way, and no chance at all that you would find out.

It was set up in 1999 as a fifty-fifty joint venture between KPN, the Dutch former state telecom, and Qwest Communications out of Denver, with the engineering staff of EUnet folded in. The plan was a ring of fiber around western Europe, thirteen thousand kilometers of it, finished in 2001. Jack McMaster, out of AT&T, ran it. Roughly two and a half thousand people worked there.

In November 1999 it listed on the Nasdaq and in Amsterdam at the same time, sold about a tenth of itself and raised something near eight hundred and eighty million euros. In 2001 it bought Ebone from Global TeleSystems for a figure reported around six hundred and forty-five million euros, which made it the operator of the pan-European academic backbone as well. From founding to bankruptcy took three years.

i was at university in Turkey through all of this and had never heard the name until much later, which is unremarkable. Nobody had heard it. That is the part that stays interesting about backbone operators: the failure mode of the whole class is that the people whose traffic depends on you have no way to know you exist, right up until the week they find out.

~ the record ~

~ the money that was not there ~

The industry had a habit in those years of selling capacity to a competitor and buying an equivalent amount back on the same day, then booking the sale as revenue while treating the purchase as a capital asset spread over twenty years. Two companies could do this to each other and both would report growth. Nothing moved and no customer was involved. The trade press eventually settled on calling them hollow swaps.

Qwest was doing this at scale in the United States and it was later the subject of an accounting fraud case. KPNQwest's own reported revenue carried the same shape, indefeasible rights of use recognized as a lump on signature rather than across the life of the contract. The bankruptcy trustees spent years afterward suing Qwest and its former executives over it, and settled in the estate's favor. By then there was nothing left to save.

~ the last week ~

On 30 May 2002 the company told its own customers, in writing, that they might want to make contingency plans with another provider. That is the most direct sentence a network operator can publish and it means the same thing every time. The banks had withdrawn the credit facility. The following day, 31 May, the court in Haarlem declared KPNQwest bankrupt.

The network did not stop when the company did. Around a hundred staff in the Brussels operations center kept the traffic running for eight days at an employer that had stopped paying them, then gave a deadline of quarter to five on 14 June and said they would leave. The liquidators found enough to keep seventy of them to the end of the month. The switches went off on 2 July.

~ what it sold for ~

Interoute bought the assets a fortnight after the shutdown for something around fifteen million euros, which is close to two percent of what KPNQwest had paid for Ebone alone the year before. KPN separately took back the Dutch parts and the operations center in The Hague. The fiber was undamaged the entire time. It went back into service under other names and the traffic returned to it, which is the right outcome for a cable in the ground and a bleak one for anybody who thought they were building a company.

kpnqwest.com resolves today and serves a marketing blog run by somebody with no connection to any of it. The domain outlived the network and everyone who ran it, and is currently being used to sell advice.

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