ExciteAtHome Turns Off High-Speed Internet Service to AT&T Customers

SAN FRANCISCO – After a bankruptcy judge cleared the way, the ExciteAtHome high-speed Internet network cut service to 850,000 AT&T Broadband customers early Saturday, but said subscribers to other cable companies were not immediately affected.

AT&T said it had started transferring its customers to its own network, a process that could take up to 10 days for some subscribers.

On Friday, a judge cleared the way for the bankrupt ExciteAtHome, with more than 4 million subscribers, to turn off its high-speed network. Bankruptcy Judge Thomas Carlson said the company, based in Redwood City, could cancel existing contracts with cable companies as early as midnight Friday.

The ruling affected many of the nation's largest cable companies, including AT&T, Cox and Rogers, that sold Internet access through ExciteAtHome's network.

ExciteAtHome wanted the cable companies to pay substantially higher fees to connect to its network. Until ExciteAtHome's bankruptcy, the cable companies had been paying a monthly fee of $12 per subscriber.

By forcing the cable companies to pay more to use the high-speed Internet service, ExciteAtHome and its bondholders hope to prove the network is worth substantially more than the $307 million AT&T has bid for it.

Messages left for ExciteAtHome were not immediately returned Saturday.

In a message on the company's Web site, ExciteAtHome said it was still negotiating continued service with its other cable company customers, but ended service to AT&T "after determining that it would not be able to reach agreement ..."

AT&T's 850,000 customers on the ExciteAtHome network lost service after midnight.

About 86,000 customers in the Northwest were transferred to AT&T's own network on Saturday, and the company planned to move the rest — in Chicago; Pittsburgh; Hartford, Conn., and cities in the West — over two to 10 days.

Customers will receive two days free service for every day of interruption, said Andrew Johnson, AT&T's vice president of communications. The transfer of networks is not expected to affect their monthly rates, Johnson said.

Cox Communications representatives did not immediately return message Saturday.

John Tory, president and CEO of Rogers Communications, said the company's 425,000 customers using ExciteAtHome had not lost service. He said negotiations continue, and the company has a backup plan to move its customers in a matter of hours if the network does go down.

The judge gave ExciteAtHome the leeway to end the contracts after concluding they had become "clearly burdensome" to the company. ExciteAtHome executives said they were costing the company up to $6 million per week. The companies said they plan to appeal.

ExciteAtHome's bondholders have accused AT&T of using its controlling position on ExciteAtHome's board to steer the company into bankruptcy as part of a scheme to buy the company, owner of one of the nation's biggest high-speed Internet networks, at a bargain price. AT&T has denied the allegations.

Comcast, Cox Communications and Insight Communications had put together an offer to outbid AT&T, but withdrew the proposal when Carlson refused to delay Friday's hearing, said Charles Cohler, an attorney for Comcast. Cohler didn't provide details of the offer.