Comcast Gives @Home Three Months

ExciteAtHome's biggest remaining cable customers have agreed to pay hundreds of millions of dollars to ensure that the bankrupt Internet access provider keeps its service up and running for the next three months. Cox Communications Inc. and Comcast Corp. said Monday their separate $160 million deals will give them time to develop their own networks for cable Internet service. ExciteAtHome provides fast Web access for 570,000 Cox accounts and most of Comcast's 792,000 Internet subscribers. Another large ExciteAtHome cable partner, Toronto-based Rogers Communications, struck a similar deal to protect its 425,000 customers while it develops its own service, though the price was not disclosed.

And Insight Communications, the nation's ninth-biggest cable operator, said it also had agreed to pay ExciteAtHome to stay on, ensuring access for its 75,000 customers. Insight will eventually shift customers to alternate Internet service providers.

The payments, which must be approved by a federal bankruptcy judge, would be in lieu of the monthly subscriber fees that cable companies pay to ExciteAtHome for its service. Until ExciteAtHome filed for bankruptcy protection, the cable companies had been paying a monthly fee of $12 per subscriber.

The payouts from Cox and Comcast alone would exceed the $307 million AT&T bid to acquire ExciteAtHome's network, a deal that appears close to being withdrawn.

Rogers CEO John Tory said all the cable companies' deals require ExciteAtHome to forward e-mails sent to former "AtHome" accounts to addresses at the cable companies' new networks. ExciteAtHome spokeswoman Estela Mendoza declined to comment.

The deals follow negotiations that began last week before a federal bankruptcy judge let ExciteAtHome cancel what he called "clearly burdensome" contracts with cable companies. ExciteAtHome said the contracts were costing up to $6 million per week.

ExciteAtHome kept its service on for most of its 3.7 million subscribers in North America, but it severed connections for more than 850,000 AT&T Broadband customers after the two companies failed to reach an agreement.

"You don't realize how reliant you become on the Internet until something like this happens," said Scott Henry of Petaluma, Calif., who was especially frustrated about being cut off from news and online shopping.

By Monday, AT&T said it had moved about 330,000 of its affected subscribers, mainly in Oregon, Washington and the Dallas area, to its own network and restored their Internet access. Next in line were more than 300,000 customers in Illinois and the San Francisco Bay area.

Steve Lindemann, 45, of Redmond, Wash., was switched to the new network Sunday and noticed no difference in its performance. However, he and his wife, Allyn, worried that e-mails sent to their old "AtHome" address were lost.

Customers in Denver and Salt Lake City were due to be plugged into AT&T's new network Wednesday; people in Hartford, Conn., Pittsburgh, Sacramento, Calif., and Rocky Mountain cities on Thursday; and Michigan on Friday.

Redwood City-based ExciteAtHome has sought higher payments from cable companies that connect to its network, and its bondholders had hoped to prove the network is worth substantially more than the $307 million in AT&T's offer.

AT&T, which owns 23 percent of ExciteAtHome, surrendered its majority representation on the company's board in October, hoping to avoid criticism it had engineered the company's bankruptcy so it could buy the cable access network at a steep discount.

Now AT&T's ability to move customers onto its own cable access network raises the question of why it would need to buy ExciteAtHome's system. An AT&T spokeswoman declined to comment.

Copyright 2001 by The Associated Press. All Rights Reserved.

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Author: 6 ABC - Action News