Excite@Home Taps DSL Lines

4/16/2000 8:00 PM Eastern

Excite@Home Corp. cut a deal with digital - subscriber-line carrier Rhythms NetConnections Inc. to provide data service in markets where it lacks a cable presence.

The deal will add another 15.3 million households to Excite@Home's existing footprint, boosting that total to 87.3 million. Excite@Home has roughly 1 million high-speed-data customers in North America.

Although Excite@Home would not reveal which markets it will target first for the service, it said in a prepared statement that future markets would include New York and Los Angeles.

Excite@Home will not get a ready-made installed base of high-speed-data customers from the agreement. Instead, existing narrowband users of its Excite portal will be likely targets for high-speed DSL service. Excite claims about 20 million narrowband users.

Rhythms NetConnections will work through @Home Solutions, which also offers turnkey high-speed-data services to small and midsized cable operators.

Janco Partners analyst Ted Henderson said last week that the deal was positive for Excite@Home, establishing it as a player in cable and DSL. But Excite@Home's stock price dropped about $1 per share to $26.06 when the deal was announced last Wednesday, and it continued to slide the next day, closing at $25.

@Home Solutions president and general manager Mark Mangiola said he has been waiting for DSL to become more technologically and economically feasible.

A recent Federal Communications Commission ruling that forced regional Bell operating companies to share lines into customers' homes with alternative providers helped, along with emerging standards that have made the technology cheaper to deploy and more reliable, he added.

In large markets like New York, @Home Solutions will be up against stiff competitors, including Time Warner Cable's Road Runner service and Bell Atlantic Corp.'s "Infospeed" DSL offering.

Mangiola said @Home Solutions plans to target customers that were sitting on the fence regarding high-speed Internet access.

"We're not going to be able to jar somebody loose [from an existing offering]," he added. "The first guy to the door wins. If Bell Atlantic already has a customer, it's going to be pretty hard to take them away."

Want to read more stories like this?
Get our Free Newsletter Here!