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Excite@Home Severs Some Broadband Service

The move followed a bankruptcy court ruling Friday that said Excite@Home could dissolve contracts with its partnering cable companies because those deals had become a fiscal burden.

Executives said the company’s contracts were contributing to a loss of $6 million a week. Before the move, Excite@Home had some 4 million residential customers.

The company said in a release this weekend the decision to cut service to AT&T subscribers was made “after determining that it would not be able to reach agreement with AT&T.”

On its Web site, AT&T said officials continued negotiations with Excite@Home into early Saturday morning “only to see the Excite@Home service cut off.”

AT&T said it has transferred 86,000 customers on the West Coast to a new AT&T Broadband Internet network on Saturday. They said further migration would continue in the next 10 days.

Excite@Home is still in service negotiations with cable providers Comcast and Cox Communications. Subscribers from those systems still have access to broadband service, the company said.

Friday’s ruling ended the legal battle Excite@Home officials waged against the company’s creditors to prevent the shutdown.

Company officials said the creditors’ push to cut off service was meant to force an increase in the bidding price for the bankrupt company’s assets.

In court papers, the company said creditors “seek to play a ‘game of chicken’ in which the threat of a blackout is used to extort [the partnering cable companies] into paying yet more for @Home’s services,” the Associated Press reports.

AT&T, which owns a controlling interest in the company, offered to buy the broadband network for $307 million after Excite@Home filed Chapter 11 bankruptcy in September.

Federal Communications Commission Chairman Michael Powell sent Bankruptcy Judge Thomas Carlson a letter Thursday, urging the judge “at a minimum, to provide for an orderly transition rather then a precipitous shutdown of Excite@Home, to avoid disrupting broadband service to a significant percentage of U.S. customers.”

But Carlson said consumers’ interests didn’t factor into the equation.

“The end users may be affected by these proceedings, but they are not parties to these proceedings,” he said. “Bankruptcy typically causes much disruption all the time, leading to loss of jobs and services to communities.”

Both Comcast and Cox told customers they would shift to the significantly slower-speed NetZero cost-free dialup service should Excite@Home terminate its network access. Both companies say they are building their own high-speed networks, but said that work won’t be completed until sometime next year.

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