In a move that will add muscle to its negotiating power, Excite@Home on Friday won permission from a federal bankruptcy court judge to terminate its existing service contracts with affiliate MSOs and potentially shut down its high-speed data network until more favorable service contracts could be forged.
But gaining permission to shut down does not necessarily mean Excite@Home's 3.7 million customers will see their modems go dark. The troubled high-speed cable provider, at press time, had not issued any statements as to its operational plan or whether it would enter into a negotiation period with its cable affiliates.
Although expected to come the same day, U.S. Bankruptcy Court Judge Thomas Carlson did not rule on whether Excite@Home could accept the $307 million offer from part-owner AT&T Corp. to buy the lion's share of its assets.
But last Friday's action did cap a week of speculation even as the cable industry convened in Anaheim, Calif. for last week's Western Show. Much of the talk on the cavernous exhibit floor and in individual sessions focused on the Excite@Home court date.
MSO executives at the show were busy fielding questions about how they would continue service. After one panel session, AT&T Broadband CEO Bill Schleyer said the Denver-based MSO didn't expect a service interruption, but was prepared if that happened.
"If for some reason we do get turned off — which I don't think will happen — but if that does happen, we are prepared to move our customers very quickly to a new network with very little down time disruption," he said. "In our view we think customers will understand it and it will not be for a long time. We are not talking months."
Meanwhile, Schleyer said he was confident that parent AT&T Corp.'s $307 million bid for Excite@Home's assets would get a green light from Carlsen.
"We have made a bid to purchase the assets of @Home, which the bankruptcy court will be hearing within the next week, and we think it is likely at this point in time that we'll purchase that asset and there will be no down time," he said. "We think that is the most likely scenario."
Schleyer admitted the MSOs and Excite@Home have "a very acrimonious relationship right now, but in the event that it doesn't go the way we want it to go, we have backups," he added. "Everything we have done has been focused on the customer. It's the most important thing we are doing in the company."
@Home affiliate Cox Communications Inc. took further steps toward self-sufficiency during the Western show, announcing it would buy routers from Riverstone Networks Inc. and provisioning equipment from ADC Telecommunications Inc. Cox officials have said they are leaning toward taking future cable-modem service in house, and the two announcements would seem to support that.
The MSO has completed about 75 percent of the work needed to create its own high-speed-data network. It could start switching over customers in about three months, according to Cox manager of corporate communications Laura Oberhelman.
Cox had originally planned to complete the work by its planned June exit from the Excite@Home network, but "those plans were obviously stepped up," Oberhelman said.
The ADC deal is significant given the end of the interim provision agreement with Excite@Home Friday. Mitch Auster, ADC's vice president of product management and marketing for the company's broadband infrastructure and access unit, said Cox has already started installing ADC's FastFlow broadband provisioning manager and can take over provisioning duties for portions of its cable territory immediately. The three-year contract will provide Cox a system able to handle up to 4 million Internet-protocol addresses for data and telephony services.
While ADC and Riverstone could benefit from the Excite@Home disintegration, other companies have seen a downside to the drama. MSOs have shelved some projects — including open-access tests with other Internet-service providers — to focus on quickly developing high-speed data systems.
EarthLink Inc. vice president of products and services Tom Andrus said Excite@Home's woes were both a blessing and a curse for the ISP, which has launched cable-modem service with Time Warner Cable in 19 markets.
EarthLink has been readying for multiple ISP trials with AT&T Broadband, Cox and Comcast Corp., but those plans have slowed as Excite@Home has deteriorated. The MSOs' technical staffers involved in the multiple ISP trials have for the most part been reassigned to creating emergency migration strategies should Excite@Home shut down as threatened.
Andrus added that EarthLink has talked with operators about taking over some ISP duties in a post-Excite@Home world, but noted that MSOs are reluctant to wholly turn over their service to another third-party ISP.
At the same time, the cable-modem service's demise has underlined the point that running an ISP is no easy task, and with rollouts already under way in Time Warner territory, EarthLink can make a better argument for offering its service over cable plant.
"Showing the cable companies that we are willing to step up and do that really makes them more confident," Andrus said.