AT&T Corp told analysts on Friday that along with its other cable partners it is worried about Excite@Home Corp efforts to build out its high-speed internet-access cable business. AT&T said that recent summit meetings between Excite@Home, AT&T and its cable partners have focused on difficulties with Excite@Home’s progress. The move to display its concern comes despite its continued up-beat predictions about its cable strategy. By going public with its specific concerns about Excite@Home the company is clearly hoping to pressure the unit into improving its performance.
In the past year or so AT&T has committed up to $120bn in acquiring cable properties to give it last mile broadband access to consumers and businesses across the US. Despite FCC reviews of its two key mergers Telecommunications Inc and MediaOne Group which still has to win clearance, it is the company’s relations to Excite@Home that has provided the most antagonism to AT&T’s cable plans.
AT&T has a major stake in Excite@Home along with other cable operators. It also has a contract that makes Excite@Home the companies sole ISP for its cable customers until 2002. This has brought regulators across the US to question whether AT&T has a right to bundle charges for its affiliated ISP service.
Differences of opinion about what AT&T should be doing with Excite@Home were also rumored to be behind the surprise resignation of Leo Hindery, president and chief executive officer of AT&T’s Broadband & Internet unit business in early October. AT&T has also been rumored to be looking to sell its interest in the company for some time.
Excite@Home has been charged with building upgrading and building out AT&T’s and its cable partners’ networks to handle two-way traffic – enabling the TV networks to be used for telephony and data services. AT&T has budgeted the basic upgrades, including moving fiber-optic lines closer to customers, at $2.2bn, with another $409m set aside to prepare for telephone service and $291m to provide backup power for telephones.
Among the concerns relayed to analysts on Friday, AT&T said there were doubts about the quality and pace of Excite@Home’s field installation, customer support and the network maintenance.
Excite@Home president George Bell was quoted in the Wall Street Journal saying that the key point of the regular summit meetings was to fix problems in the two-way cable roll-out. He added that AT&T’s concerns revealed how seriously the company was focusing on the internet-access business – as if the $120 investment did not signal a strong enough commitment.
AT&T needs to get its cable network up and running as quickly as it can. It hopes to have its Excite@Home subscribers up from the current 133,000 to a million by the end of next year but has only launched trail services in eight markets so far. The longer the delays rolling out the service, the more time its rivals will be able to package alternative offerings using DSL.
Meanwhile Dan Somers, who took on the title of president of AT&T’s Broadband & Internet unit when Hindery quit maintains that AT&T’s build-out remains on track. The company has estimated that the it will cost about $2,400 to wire each house that the cable systems pass to get them ready for the suite of two-way services.
