The recently rechristened Excite@Home, one of the Net's high flyers, takes advantage of a cable TV-based Internet access network to provide download speeds that beat traditional dial-up access. But there's more to life than increasing access speed, companies are learning.
The vast majority of Net users continue to access their favorite Web pages using a dial-up account with an Internet service provider and a regular phone line. And this army of Net slowpokes may provide Excite@Home with its best opportunity to grow, offering the company a means to coerce users toward its higher-speed services.
This largely untapped market is one of the keys to Excite@Home's strategic aspirations. Company executives have said the combined company will be able to harvest two markets--first-time "broadband" users and the much larger dial-up market--drawing from Excite's 28 million registered users. @Home currently has fewer than 500,000 customers.
Some analysts and people familiar with the company believe Excite@Home should embrace slower-speed dial-up technology--and continue developing Web content for lower-speed connections--to reach millions of potential customers who cannot yet get, or don't want, the cable modem service.
In addition, offering dial-up access would allow the company to provide Net service to its broadband subscribers who travel frequently and therefore can't access the high-speed version of the service.
"@Home will need a dial-up option," said William Randolph Hearst III, a partner at venture capital firm Kleiner Perkins Caufield & Byers and a member of the Excite@Home board of directors, during a recent interview with CNET News.com.
Although Excite@Home is the nation's largest cable modem service provider and it continues to grow rapidly, the company has faced some hurdles adding subscribers because the service is not available in many areas of the nation.
Similarly, rumors persist that Microsoft may want to sell its dial-up business, MSN Internet Access. The software giant's recent $5 billion investment in AT&T brings Microsoft and Ma Bell--and therefore Excite@Home--closer together, although no deals have been announced.
Excite@Home also could reap many of the same benefits by entering into an alliance or partnership with a dial-up provider such as WorldNet.
Cable modem religion?
Excite@Home previously has shown signs that it is not wedded to any one content-delivery technology. @Home's @Work business division resells T1 and DSL (digital subscriber line) service.
However, even though the recent merger between @Home and Excite gives @Home an entrée into the traditional dial-up world, most Internet users still must access Excite and its content through their dial-up ISPs, an asset @Home does not own.
Some analysts have said that @Home, until it closed the deal with Excite, was effectively missing an opportunity by not reaching out to narrowband users while its cable partners slowly upgraded their networks to provide high-speed Net access.
But some say adding a dial-up offering would change that. "They'd have a multiaccess product rather than saying, 'Sorry, it's not available,'" said Jeff Sadler, an ISP analyst at FAC/Equities. "Ask any salesman; he hates selling just one thing."
Others analysts echoed those concerns.
"If [Excite@Home doesn't] acquire someone I think they need to strike some alliances for traditional dial-up," said Michele Pelino, an Internet analyst at The Yankee Group, a market research firm. "When you look at broadband, the number of people who have it is limited, so in order to reach the vast majority of consumers who have plain vanilla access, it would help to have a dial-up option."
Until cable modem service is available in a larger area, @Home is missing out on some revenue opportunities, she said.
"So far they have broadband covered pretty well, but that's really not where the consumers are today so [Excite@Home] is missing 98 percent of the market," Pelino said.
Having a dial-up alliance also would allow Excite@Home to reach many users who may never have broadband Net access, Pelino said. The Yankee Group estimates that, for a variety of reasons, only about 60 percent of the U.S. population will ever have the ability to receive a broadband service.
The largest national dial-up players include America Online, MindSpring Enterprises, and EarthLink, but for a variety of reasons, there are few ISPs that would be a good fit for Excite@Home, said Bruce Kasrel, an ISP analyst at Forrester Research.
"Prodigy and [free ISP] NetZero are probably the largest likely partners that would not have any real potential land mines," Kasrel said.
Ultimately, Kasrel said, executives must decide what business they want to target. "@Home needs to ask themselves, 'Are we about Internet access, or are we just about high-speed Internet access?'"