Cable Companies Cut Deal With Excite@Home

Comcast and Cox Communications, two of Excite@Home’s largest cable partners, agreed yesterday to pay $160 million each to ensure their cable Internet subscribers will retain access to Excite@Home’s network. In the meantime, both companies plan to create their own replacement broadband networks.

An estimated 570,000 Cox subscribers and 792,000 Comcast customers use the Excite@Home network.

Rogers Communications, with 425,000 Excite@Home users, and Insight Communications, with 75,000, struck similar deals, although they didn’t disclose details.

The spate of new agreements comes after Excite@Home’s creditors won approval from a federal bankruptcy judge last week to dissolve contracts with the company’s various cable partners.

Judge Thomas Carlson said the contracts, which executives said cost some $6 million a week, were “clearly burdensome” to the company.

Hours after that decision, Excite@Home cut off access to 850,000 subscribers from partnering AT&T Broadband “after determining that it would not be able to reach agreement with AT&T,” the company said.

Excite@Home did not interrupt service to partners like Cox and Comcast, however, while negotiations continued.

An AT&T statement said company officials continued negotiations with Excite@Home into early Saturday morning “only to see the … service cut off.”

AT&T owns a controlling interest in Excite@Home and had offered to buy the bankrupt company’s assets for $307 million. The New York Times reports that purchase now seems very unlikely.

As of this morning, AT&T said it had moved 500,000 of its customers — more than half of those who subscribe to their broadband service — to the company’s new high-speed network.

AT&T expects to have switched 80 percent of its customers to the new network by the end of the day Tuesday.