More Players Circle Dying ISP Channel

Author:
Updated:
Original:

Though High Speed Access Corp. has received the green light from SoftNet Systems Inc. to launch contract talks with existing ISP Channel affiliates, a host of competitors, including Excite@Home Corp. and lower-profile companies such as Zcorum Inc. and InterTECH, have also stepped in to grab a piece of the pie.

Excite@Home grabbed the most coveted piece on Dec. 21 when it confirmed that its @Home Solutions unit had inked a "binding commitment" to provide cable-modem services to Mediacom Communications Corp., a former ISP Channel affiliate. Excite@Home said the deal, which still is subject to a final agreement between @Home Solutions and the MSO, could expand its broadband footprint by as many as 1.2 million homes, giving it an overall footprint of more than 88 million homes.

SoftNet said ISP Channel would cease operations by Dec. 31, 2000. But the company won't pull the plug on some systems until mid-January, to allow those affiliates time to come to terms with another provider or go it alone.

Other MSOs have also thrown legal caution to the wind, seeking affiliation deals with providers other than HSA.

InterTECH Corp., a Gering, Neb.-based company that provides a hybrid satellite-broadband system, has also jumped into the ISP Channel fray.

"It's been a zoo," said InterTECH president and CEO Bill Bauer, referring to the number of calls his company fielded from ISP Channel affiliates seeking alternatives as news of ISP Channel's death made the rounds.

Bauer said he was trying to close deals with five or six ISP Channel affiliates before the end of 2000. Bauer declined to name the operators InterTECH has talked to.

If those deals come to fruition, InterTECH could double its high-speed customer base, Bauer said. InterTECH presently serves 17 systems and roughly 50,000 homes passed.

Many ISP Channel affiliates feel hamstrung because SoftNet has cut a deal only with HSA, said Bauer.

"Smaller operators don't have the pockets of the big guys and don't want to get into lawsuits (if they choose a provider other than HSA)," Bauer added.

That hasn't stopped Galaxy Cablevision from taking legal action against its high-speed provider. On Dec. 27, Galaxy got a 10-day, temporary restraining order against ISP Channel after it filed the request in federal court in Mississippi.

That action "will give us more time to evaluate our current position and to talk to other high-speed providers," Galaxy vice president of programming Doug Montandon said, adding that Galaxy will have until Jan. 15 to determine its course of action.

"We want to explore all of our options. Our only concern is to try to provide and not interrupt (cable-modem) service. The buck stops here in terms of our customers."

Montandon said negotiations with ISP Channel "are at a virtual standstill."

Still, Galaxy has sought out other providers, though no deal that makes financial sense has emerged, he added.

"Offering high-speed services by ourselves is too pricey right now," Montandon said, referring to the headend equipment that would be involved. "We also don't have the people in place to do that."

Another company that hopes to grab a portion of ISP Channel's business is Alpharetta, Ga.-based ZCorum.

An admittedly "quiet entity," ZCorum depends more on word-of-mouth than drawn-out marketing plans to generate leads and business deals, chairman and CEO Tony Tan said.

ZCorum, which also works with digital subscriber line and wireless providers, uses a turnkey, private-label model, Tan said.

The turnkey moniker can be misleading, however, because the service operator, not ZCorum, pays for network equipment, marketing and connectivity, Tan said. In turn, ZCorum charges a fee per subscriber, monitors the network and provides customer care.

Of ZCorum's more than 200 affiliates, about 15 are with cable operators in rural areas, Tan said. Tan would not disclose those operators, citing non-disclosure agreements.

He added that his company has received several calls from ISP Channel affiliates, but no deals have been announced.

ISP Channel affiliates "are scrambling," Tan said. "They're begging us to help them out."

HSA, meanwhile, had not announced any deals with ISP Channel affiliates by press time. But HSA has gained some potential high-speed business via a deal with C-COR.net that took effect Dec. 29.

Under terms of the deal, HSA will handle customer care, network-operations-center activities and help-desk support. C-COR.net, meanwhile, will provide additional technical support for network troubleshooting.

C-COR.net entered the cable-modem service business through its $46 million acquisition of Convergence.com in 1999. A number of Convergence.com cable affiliates, including ones in Lebanon, Ill. and Gwinnett County, Ga., are now owned by Charter Communications Inc., an HSA investor.

SoftNet also declared on Dec. 19 that Aerzone, its wireless-broadband division, would shut down "within the next few weeks."

SoftNet is also trying to sell Laptop Lane, Aerzone's business-center division. SoftNet founded short-lived Aerzone this past February.

SoftNet said in a press release that Aerzone will go dark because the company "would need significantly greater total capitalization than we originally projected."

And SoftNet said Lawrence B. Brilliant resigned from its board of directors. Brilliant also resigned as SoftNet's CEO earlier this year, citing health reasons. Garrett Girvan, SoftNet's current CEO, will take over Brilliant's spot on the board.

Jeff Bowden, executive vice president of strategic integration at Pacific Century CyberWorks, joined SoftNet's board.

Related