Excite@Home Status Unclear, AT&T First to Go Dark

UPDATED 850,000 AT&T broadband customers are the first to lose service as Excite@Home determined it would not be able to reach an agreement with the telecommunications giant. Service is limited to 86,000 subscribers in Washington and Oregon who are in the vacinity of an AT&T owned and operated backbone. Exite@Home is still in negotiations with its other cable partners. AT&T assures customers they will have service restored within 10 days. The comapny was previously in negotiations to purchase Excite's assets.

Millions flocked to cable modems with the promise of a fast, easy connection that is always on. Forty-five percent of cable modem users in the United States may suddenly find themselves regressing back to dialup this weekend following Excite@Home creditors' successful bankruptcy court petition that allows the troubled Internet provider to terminate service contracts.

Leading cable companies including AT&T, Comcast, and Cox have each been paying Excite a nominal $12 monthly access fee per user, and even agreed to an $8 price hike last month. Within a short frame of time, cable companies referred millions of customers who all passed through Excite's network infrastructure. Between August, 2000 and the new year, a million new accounts were added to the service, catapulting its consumer base from 2 to 3 million users.

Despite achieving this explosive growth, Excite's network was not fully saturated – a condition which was the basis of the service's fragile business model. Without being able to turn a profit, Excite went from being a value added partner to the bane of the cable industry.

A bulletin posted to the Excite@Home Web site read, "Once rejected, the cable companies must negotiate new agreements acceptable to the company or risk the possibility that the @Home service may be terminated." Cable providers and Excite shareholders have engaged in what amounts to a game of chicken over the pending shutdown, as creditors demand costlier access fees, and customers wait in limbo.

Individual ISPs have eyed moving forward with continguincy plans to provide customers with limited Internet dialup access until terms can be renegotiated with Excite. Customers are urged to backup Web properties, and to frequently check e-mail while it is functional. Cox is among the many providers that have already begun work to build their own backbones for Internet connectivity.