Excite@Home tops 1 million, but challenges remain

Most analysts had expected Excite@Home to finish 1999 with between 1 million and 1.1 million customers, meaning the cable Net access company's growth is in line with estimates.

"A million is a million," said Excite@Home executive vice president Dean Gilbert. "We're clearly the single largest 'broadband' provider in the world."

But the Redwood City, Calif., company has stumbled at times and faces competition from the local phone companies and their high-speed digital subscriber line (DSL) technology. Additionally, while lackluster Road Runner is currently Excite@Home's biggest cable rival, AT&T and dial-up Internet service provider MindSpring will announce tomorrow that AT&T will eventually allow cable Internet access customers to choose MindSpring as their ISP instead of being required to choose Excite@Home, as they must currently. (See related story)

"The cable industry will be able to claim it's pretty close to 2 million customers by year-end," said Gary Arlen, president of Arlen Communications, a research firm specializing in interactive media. "But DSL is going to blast off in 2000 so the cable industry's gloating will be short-lived."

Born as @Home Network, the company launched its service in Fremont, Calif., in September 1996. In January 1999, it agreed to acquire Web portal Excite.

The @Home service, which carries Internet traffic at high speeds over cable television networks, is now available in more than 100 markets, representing hundreds of cities and communities. Excite@Home's largest markets include much of New Jersey, Baltimore, Dallas-Fort Worth, San Diego, the San Francisco Bay Area and Canada's Ontario and Calgary.

Some of the larger of Excite@Home's 23 cable partners add roughly 3,000 new customers per week, and the company already has several overseas ventures in the works.

On the other hand, almost a year after sending postcards to potential customers in some parts of the San Francisco Bay Area indicating that the service would soon be ready, cable Net access still isn't available. Intermittent technological problems, including some major outages, internal strife and political squabbles also have tarnished the company's image as a high-flying Net company.

Excite@Home executives believe the company has put some of its recent struggles behind it--most notably ending months of infighting by announcing a tracking stock for its media assets--which could clear the way for future growth.

Nonetheless, Excite@Home remains a Wall Street favorite and is the most visible face of the emerging market for high-speed, or broadband, data services. Analysts expect the broadband industry to be hugely lucrative as thousands of content developers, software makers and service providers scamper to optimize their offerings for high-speed connections such as cable modems and DSL.

Several recent studies have predicted strong growth for DSL over the next few years. In response, Excite@Home executives believe the company can add customers more quickly than it has in the past by improving its promotions and as its cable partners continue to upgrade the networks that enable the service.

"Now the challenges are how do you scale it to millions, not just get it to market," Gilbert said.

Gilbert said he expects to expand into greater offline advertising and promotions next year as cable modems become increasingly available off the shelf in retail stores.

Many analysts predict Excite@Home will claim between 2.5 million and 3 million customers by the end of 2000. For now though, the company trails a hefty group of major Internet service providers including America Online, EarthLink and MindSpring Enterprises (which have agreed to merge), AT&T WorldNet, Microsoft's MSN and NetZero, a free ISP.

"A million always catches people's attention...[But] AOL still controls more than half of the dial-up market, so @Home still has a long way to go," Arlen said.

Excite@Home also announced that the Excite network of Web sites has exceeded 100 million page views per day.