According to local sources, Beijing-based Capital Network, an Internet services provider (ISP) owned partly by the local Beijing government, appears to be shutting down.

According to China's 21st Century Business Herald, over a hundred broadband clients had paid Capital Network for connection services, but Capital Network did not forward these fees to China Netcom, its upstream provider. Netcom was then forced to close the broadband connections for those Capital Network clients in November, leaving many businesses without Internet connectivity.

The closure comes as no surprise to many China Internet veterans. A China representative for Spamhaus, the global spam and hacker monitoring group, says that Spamhaus saw customers fleeing the ISP three years ago.

"Capital Network had a very bad problem with unsolicited bulk email, even back then, and absolutely no customer service. They were reckless in allowing so many of the world's biggest spammers and phishers onto their networks, and the upper management did not care," says the Spamhaus representative. "On at least four occassions I tried phoning both their offices in Fengtai District, in Chaoyang District, and an overseas office in Virginia [USA] about two years ago to speak with the top management about their problems. Many overseas users were blocking outgoing messages from Capital Network, but the company seemed only interested in getting China-based users' fees. They did not seem too interested in their future."

Currently many of Capital Network's top executives are missing and some employees have not been paid for many months. The company's bank accounts were frozen around May 2004 and staff reduced from 1000 to a little over 200.