The troubled ISP Excite@Home has said it will cease operating on
28th February 2002 following yesterday’s withdrawal by AT&T
Broadband of an offer to buy the company’s assets. Excite@Home had
rejected a $307 million offer from the cable company and gambled
for an increase by threatening to disconnect AT&T’s customers.
It disconnected 850,000 AT&T customers on Saturday.
Excite@Home agreed deals with other cable companies to continue
service for the next 90 days during which time these companies will
migrate their customers to another ISP. The companies agreed
immediately to pay a total of $355 million to keep Excite@Home in
operation over this transition period. The transition service
agreement is still subject to bankruptcy court approval.
The deal with the other cable companies followed a judges ruling
on Friday that Excite@Home could sever its distribution agreements
with all its cable company customers because the agreements were
financially unfavourable to Excite. The cable companies were told
that they must negotiate new agreements acceptable to Excite or
risk the possibility that the service may be terminated. Since
Saturday, AT&T has managed to migrate around 40% of its
disconnected users to a new network.
The significance of Excite@Home’s predicament is that its
network supports over one third of all broadband users in the US.
The company filed for bankruptcy protection in September with debts
exceeding $1.1 billion. At that time, its share price had fallen to
just 15 cents, down from a peak of $55.
