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Commentary: @Home last-ditch efforts flop

Attempts to hold Internet service customers "hostage"--in a gamble to squeeze extra compensation from the multiple system operators--only hasten the company's demise.

By Jay Pultz and Walter Janowski, Gartner Analysts

The demise of Excite@Home this week, although swift, is not surprising. Its brinkmanship on Nov. 30 to hold Internet service customers "hostage" in a gamble to squeeze extra compensation from the multiple system operators only hastened its end.

Although Cox Communications and Comcast

See news story:
Excite@Home to shut down; AT&T drops bid
agreed to extra service fees, AT&T balked. And as soon as Excite@Home unplugged, on Dec. 1, more than 800,000 AT&T Broadband customers, it sealed its own death warrant.

AT&T's reaction to the shutoff was immediate. While frantically migrating its customers from Excite@Home connections to its own high-speed network, AT&T took time out of its contingency operations to rescind on Dec. 4 its outstanding $307 million offer to buy all of Excite@Home. (AT&T owns 23 percent of the company.)

Of course, most affected by the contretemps between Excite@Home, its creditors and the multiple system operators are cable Internet customers. High-speed Internet access has fast become an essential business tool for company teleworkers and smaller businesses--and an everyday convenience for consumers.

Faced with service interruption, or slower dial-up phone connections, AT&T's @Home users are clearly frustrated and annoyed. That may prompt them to switch to digital subscriber line (DSL) and satellite Internet service providers, and further make them reluctant to switch back once cable network capacity is enhanced. These alternative providers will assuredly stress service reliability in their sales campaigns to come.

As Gartner has recommended before, companies should develop Internet service back-up plans. DSL providers offer both company-level and consumer and small-business service offerings, with corresponding classes of service levels. Therefore, if companies must choose only one broadband service for these applications, they should go with DSL for enhanced service reliability and provider response.

(For related commentary on Gartner's assessment of the Excite@Home saga, see Gartner.com.)

Entire contents, Copyright © 2001 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.