Just three months after entering Chapter 11 bankruptcy protection, Conxus Communications Inc. Friday abruptly shut off its entire network and ceased all operations, leaving some 80,000 voice and text paging customers without service.
While Conxus officials were not available for comment, a notice sent to resellers said the move was a result of a decision by Motorola Inc. and other Conxus creditors to halt the interim Debtor-in-Possession financing the company relied on to continue operating while in bankruptcy protection.
“The principal creditors elected not to continue providing the interim financing. Therefore, it leaves the company no other option but to file for bankruptcy under Chapter 7 federal bankruptcy laws,” the notice read. “The filing will most likely result in the sale of the company’s assets and the discontinuation of business operations.”
Motorola spokesperson Ken Countess said Motorola had agreed to provide Conxus with DiP financing so prospective buyers would have time to review the company while still operating.
“Over the course of three months, we concluded there were not any offers for the network and stopped the financing at that point,” Countess said.
On Aug. 17, Conxus filed for Chapter 7 bankruptcy, after which a bankruptcy court-appointed trustee ordered the network be deactivated by Aug. 27 and terminated all Conxus employees.
Conxus notified resellers and distributors of the impending shutdown Aug. 21, and the company sent a voice recording to all voice paging customers informing them of the situation last Monday, giving them only four days to find new paging service.
The relatively short notice upset Conxus resellers, distributors and customers alike.
“People were just so agitated,” said one reseller. “We were getting threats. You wouldn’t believe it. We’ve never had people so upset.”
Even equipment vendor Motorola, which created the InFLEXion voice paging technology and voice pagers Conxus used, said many Conxus customers called Motorola demanding an explanation for the shutdown.
Motorola said it was working with all parties involved to find an alternative communications solution for Conxus customers. Exactly what that alternative will be is not yet known.
“It’s still a work in progress. We’ve got a lot of people involved trying to establish a good alternate solution for Conxus customers,” Countess said.
“The troubling thing is when the network goes off the air, their number will be disconnected. What we’re trying to do, as a third party, is help them get over that hurdle.”
Looking forward, Conxus’ demise calls into question the future of Motorola’s InFLEXion technology and its next-generation Tenor voice paging device. Countess said Motorola “will continue to support our customers supporting the InFLEXion technology.” But the two U.S. carriers who attempted voice paging on InFLEXion networks failed.
Paging Network Inc. recently wrote off the remaining pagers it had in stock from its disastrous VoiceNow venture, which netted barely 2,000 subscribers. The carrier has since transformed its InFLEXion network into a two-way ReFLEX 25 network. With Conxus’ dismantling, there are no carriers offering InFLEXion-based products or services, save a small carrier in Puerto Rico.
Conxus began a market-by-market commercial rollout of the service in November 1997, launching first in south Florida and gradually encompassing Washington, D.C., Dallas, Los Angeles, Chicago and other markets. Later, the company added a two-way text messaging service called Pocketext on the same network.
Although at one point it boasted about 87,000 subscribers, signs of trouble began in late March, when Conxus laid off about 60 percent of its work force. The restructuring process included abandoning the Pocketext service to focus more on Pocketalk, but in mid-May Conxus filed Chapter 11 and began looking for either a buyer or a new financial backer.
Cecil Duffie, chief executive officer and vice chairman of Conxus, blamed the company’s financial situation on the high capital expenses incurred in building the network.
“The length of time needed for us to get all our network components and the second-generation subscriber device on line depleted most of our cash reserves,” he said in May.
Paging industry analysts remain optimistic about the market for voice paging services, but feel the InFLEXion solution was just too expensive.
