Excite@Home tries to debunk ISP claims

The Net-over-cable company held a conference call for reporters to counter claims by America Online and GTE that opening cable networks to competing Internet service providers is not only technically feasible, but relatively easy. Proponents have called it as easy as "peanuts."

"I think they're being disingenuous about how easy it is to do," said Milo Medin, chief technical officer for Excite@Home.

ISPs are lobbying for new laws that would give them the same access to cable's high-speed infrastructure as Excite@Home and Road Runner. Providing broadband connections to the Internet, which are much faster than dial-up modems, is expected to be a lucrative business over the next several years.

The battle over control of cable's closed proprietary networks has escalated in recent weeks following a federal judge's ruling in Oregon which effectively gives local governments the right to impose open access conditions on cable providers.

AOL and GTE contend that installing a router between a residential cable modem and the cable operator's network equipment located in what is called the "head end" facility will allow data traffic to be switched to competing ISPs, Medin said.

"Just saying that you can throw a box in front of the head-end, it's a gross oversimplification," he said.

AOL and CompuServe have been testing this configuration on a small GTE cable TV system in Clearwater, Florida, for the past two months. The companies held a demonstration of their efforts in Washington earlier this week.

But Medin said the proposed configuration will not work well on a large-scale deployment, for a number of reasons.

The GTE-AOL approach doesn't take into account that telephone networks differ from cable networks, Medin said. In the telephone environment, high-speed Net users get a dedicated online connection with certain speed guarantees. But on cable networks, users instead share bandwidth, and therefore their data transmission speeds vary.

The equipment used in the GTE-AOL trials would not allow cable companies to control how much bandwidth is allocated to each individual user and each ISP, Medin said.

"In a shared network, how do I make sure one ISP's customers are not using a majority of the bandwidth?" Medin said.

Medin also said that by not being able regulate data speeds, Excite@Home and other cable access providers will not be able to negotiate contracts with other ISPs. "You've got to have a framework for quality of service and bandwidth allocation, or else what is the ISP paying for?" he said.

GTE executives stood by their trial, however. Problems directing traffic and fitting new customers on the cable networks could be solved with software and by upgrading cable networks, they said.

"What they're saying is that by adding more ISPs, they're adding more customers," said Bob Bishop, a GTE spokesman. "The business model I've always heard is that you expand your network to accommodate new customers."

GTE has not yet allowed an unlimited range of ISPs onto its own cable network, the step that Medin said would demonstrate the real technical difficulties in allowing open access. The company said it would have a business plan for broad open access completed within the next few months.

The fallout from the recent federal ruling in Portland, Oregon, which is expected to be appealed, has also hit Wall Street.

"It is bad public policy. It will only upset the financial markets, which it's already doing when you look at what's happening with cable stocks and our stock," Excite@Home senior vice president Dean Gilbert said in a recent interview.

Indeed, Excite@Home shares are down significantly, from a high of 198 in mid-April to below 90 today. The stock has been one of the Internet's best performers over the past year.

Separately, the company's previously announced 2-for-1 stock split will take effect today after the close of the trading day.