Change Is in the Air at Excite@Home


Redwood City, Calif. -- The battles with cable affiliates
grab the headlines, but for Excite@Home Corp., the focus is on exploiting what it hopes is
an imminent retail growth juggernaut.

The cable high-speed online company right now is all about
creating and mastering a mainstream retail environment as it prepares for new competition
and the end of exclusive ties with those sometimes-testy cable partners.

"Scale is always a big challenge," CEO Tom
Jermoluk said in a recent interview at the company's headquarters. "We've had our ups
and downs rolling out the technology. We fight our way through them. But going from 1
million, in the next year or two, the numbers get huge. The infrastructure-scaling issues
become pre-eminent for the company."

The achievement this month of signing up @Home subscriber
No. 1 million almost pales against the target of possibly quadrupling that number by the
end of next year.

To get there, the company will accelerate its
diversification into platforms beyond the PC -- namely, cable TV via the set-top box,
wireless phones and other devices. At the same time, it is leveraging solutions for
speeding installations to the home or office.

It also will continue farming a retail channel that, by the
end of this year, could total some 250 retail stores of such national chains as CompUSA
and Office Depot.

"The biggest thing for us will be to move through the
retail channel, especially self-installation and self-provisioning," Jermoluk said.
"All of those pieces of technology need to come together to really allow users to go
to the store, pick it up and use it. That's a big move. That's how it took off when
telephone modems came out."

To that end, Excite@Home is targeting the same solutions
the rest of the cable industry views as essential to rapid installs and speedier
deployments, including availability of modems with universal-serial-bus connectivity
becoming the PC standard.

"USB has eliminated the need to open the PC case to
install an Ethernet card," Excite@Home chief technology officer Milo Medin said.
"The next major thing is to deal with the jack add, which accounts for about 80
percent of users." That will be addressed by wireless or home phone-line networking
-- another major Excite@Home initiative for the coming year.

President of subscriber networks Adam Grosser said the
company is testing a Motorola Inc. home-networking device and working with a number of
vendors such as ShareWave Inc., RadioLAN Inc. and T-Span to develop a wireless product at
an acceptable price point by late next year.

"We're very aggressive about the need for a great
wireless solution," Grosser said. "It makes the most sense in a lot of

Just as essential but a bit more problematic is
self-provisioning. Grosser said the company has launched its first self-install solution
project, which it will refine throughout the coming year, partly to deal with such
challenges as coordinating with myriad cable-billing systems.

"My goal is to have 20 percent of customers at the end
of next year self-provisioned, and 80 percent at the end of 2001," Grosser said.

Hand-in-hand with self-provisioning is more advanced
customer support. Dave Bagshaw, senior vice president of customer care, noted that
Excite@Home recently went live with its "Supportal" online help area, which will
eventually enhance the usual FAQs (frequently asked questions) and e-mail query
capabilities with third-party content from partners such as and, eventually,
online video help desks. In those cases, a service rep might demonstrate how to deal with
a specific, identifiable service problem.

Other enhancements in development include
"self-healing" software in the customer's client, which takes a snapshot of a
user's network settings so that they can be reset easily if corrupted.

"If we provide people with the avenue to more skills
to take care of their own equipment, we think that in the long run, that will benefit us,
and it will mean fewer calls," Bagshaw said.

The imperatives for dealing effectively with the huge
process of scaling Excite@Home's network and service, while making it a plug-and-play
retail proposition, have been clear for some time.

Stung by public and partner criticism about high-profile
network problems in a number of markets, Excite@Home emphasizes the ongoing nature of
upgrades it has made to its own backbone, as well as to its provisioning processes, to
eliminate bandwidth bottlenecks and remain comfortably ahead of growing demand.

Medin noted the recent turnup of 15,000 miles of new @Home
backbone, adding that the company is upgrading its infrastructure linking cable headends
to its regional data centers to OC-12 speeds, or 622 megabits per second, in order to deal
with subscriber demands.

"I think today, we're passing 2 gigabits per second of
traffic between our network and the public Internet," Medin said. "By next year,
that would be about 18 gbps, even keeping one-half of that traffic on our own

The company is also beefing up network management and
surveillance, providing more information to its cable partners about subscriber growth
trends and where usage might mandate node splitting or other measures to head off
problems, Medin said.

Belief in the work that Excite@Home is putting into its
infrastructure shows somewhat in its defensiveness about reports of network problems in
markets like the San Francisco Bay area and in recent public criticism from cable partners
such as AT&T Broadband & Internet Services.

"The company today is running better, and the service
we're providing is as good as or better than it's ever been," Excite@Home general
manager Dean Gilbert said.

"If you take the big picture and look at the amount of
complexity in building a network of this size, scale and magnitude, I think we're doing
extraordinarily well," he added. "Having said that, in a network of this
complexity, you're going to run into challenges from time to time."

While some of those challenges have stemmed from external
forces -- frequently slow provisioning from incumbent telcos of enough circuits connecting
from headends to the @Home backbone, for example -- the company has pursued alternatives
to deal with the issues.

Those include using the cable operators to lay their own
fiber instead of relying on ILECs (independent local-exchange carriers) or CLECs
(competitive LECs) to provide links, and exploring other options such as wireless trunking
capability using the recently unveiled OFDM (orthogonal frequency-division multiplexing)
solution from Cisco Systems Inc., which is already being field-tested in several markets.

"We've found some bugs, but the technology looks
pretty solid," Medin said of the wireless solution, which, he added, will transport
traffic 20 to 30 miles, point to point, at speeds of 45 mbps to 90 mbps where a fiber
connection from the headend to the main network is not feasible.

Besides the service-quality imperative, Excite@Home is also
readying for the day when the exclusivity agreements it struck with its original cable
partners begin to expire, which the company does not believe will change its outlook for
long-term commercial relationships with those affiliates.

All eyes, of course, are on 2002, when Excite@Home's
exclusivity agreements with such affiliates as AT&T Broadband, Cox Communications Inc.
and Comcast Corp. begin expiring. If Excite@Home has hit subscriber targets in the 20
million-home range, it would be difficult -- and it might make little financial sense --
for MSOs to start migrating customers to another platform.

Although AT&T Broadband has repeatedly indicated that
it would strike deals with other Internet-service providers for access to its broadband
networks, the company's 40 percent stake in Excite@Home, plus its agreement to receive
service from the company for three years after exclusivity runs out, promises a long-term,
if not exclusive, relationship.

"We have no reason to believe we won't be their
partner going forward," Jermoluk said. "If we're providing good service at a
good price, then we are their logical partner to continue to offer their services. That's
always been our goal."

Not that it isn't a challenge working with numerous
partners -- "my brothers," Jermoluk sighed in mock exhaustion -- all of them
used to following their own agendas and calling their own shots in their individual

"In general, we all tend to get to the right
answer," Jermoluk said. "Although it takes a lot of my personal time and it has
been a challenging experience, in the end, it has been one of ultimate agreement, going
forward and getting things done."

Exclusivity expiration is a two-edged sword in that it also
frees Excite@Home up to pursue business in the 40 percent of the country where it does not
have cable carriage, via digital-subscriber-line or fixed-wireless networks.

The company has already begun heading down that road,
especially in wireless. Besides its deals for providing content to wireless handset users,
Excite@Home is in discussions to become the ISP in markets where AT&T Broadband is
using wireless networks to provide "last-mile" connectivity to homes and small

"We think the core infrastructure we have gives us a
huge advantage," Medin said. "We think we can really clean up, whether it's a
cable loop, or a DSL loop, or wireless."