Excite@Home shuts down AT&T subscribers

Update The US Bankruptcy Court for the Northern District of California assented Friday to Excite@Home's request that contracts with its broadband partners be terminated. These include such heavyweight cable companies as AT&T, Comcast and Cox, all of which have hinted that without acceptable contracts they may be forced to cancel service.

Judge Thomas Carlson urged all concerned to renegotiate their agreements rather than pull the plug on more than four million subscribers, but stopped short of ruling on the issue. "It's clear that continued operations have substantial interests to the cable companies," the judge said.

Fair enough, but continued operations also have substantial interest for Excite@Home, which entertains hopes of being bought by AT&T at a fair price. Thus far Ma Cable has offered $307 million for the struggling company, a mere pittance, its creditors argue.

A great deal had been made about the possibility that services could be shut down, but this is clearly in no one's interest. By threatening to discontinue service, the company's partners/creditors might hope to pressure AT&T to cough up more generously, rather than be seen as the skinflint suitor which cost millions of subscribers their service.

On the other hand, Excite@Home itself has warned the cable companies to "negotiate new agreements acceptable to the company or risk the possibility that the @Home service may be terminated."

So pretty much everyone is threatening everyone else with this dreadful possibility, precisely because it's the ultimate failure from everyone's perspective.

Nevertheless, we've received reports of outages among @Home customers, and one report of switching. "AT&T switched us off of the Excite network this morning, and we're now on AT&T Worldnet Broadband," a reader in Portland, Oregon reports. Outages for AT&T customers have been reported in California and Texas.

According to the company, "Excite@Home announced today that it was in negotiations with all of its cable company customers other than AT&T regarding arrangements for the continuation of Internet access and related services. After determining that it would not be able to reach agreement with AT&T, the company terminated service to AT&T."

It is of course potential buyer AT&T which @Home most wishes to impress with the downside of going suddenly off the Net. The question now is, for which of the two companies will this stunt backfire with the greatest destructive force?

Only time will tell. ®