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Excite@Home turning away new customers

The financially troubled broadband provider is not accepting new subscribers, citing the bankrupt company's need to conserve cash.

Financially troubled broadband provider Excite@Home has stopped accepting new subscribers, citing the bankrupt company's need to conserve cash.

"Adding new subscribers increases incremental capital cost outlays, which directly affects the company's cash flow during the U.S. bankruptcy Excite@Home files for bankruptcy process," Excite@Home spokeswoman Londonne Corder said.

As earlier reported, Excite@Home, the leading provider of broadband Internet access, with nearly 4 million customers, filed for Chapter 11 bankruptcy protection two weeks ago and negotiated a deal to sell its high-speed network to AT&T for $307 million in cash.

A committee of five large creditors, appointed by a trustee, is leading the charge to renegotiate the AT&T deal or find a new buyer.

Corder said that while Excite@Home is reorganizing, the company will continue to provide service to existing subscribers.

"The important thing is that Excite is continuing to provide service to its existing customers," said Michael Harris, president of broadband research firm Kinetic Strategies. "If turning off the faucet ensures that Excite can continue to provide service to customers they already have, then it's a wise move."

The decision to stop taking new customers was made by Excite@Home executives and the creditors committee, Corder said.

"Excite@Home may add new subscribers if the creditors and bankruptcy court determine that it's in the best interest of all involved," she said.

The business decision will affect new revenue associated with new subscribers of the @Home service, but the company doesn't anticipate that its existing revenue will be affected by the change.

Because Excite@Home has decided to stop taking new customers, cable operators that use the company are scrambling to find a new broadband supplier, Harris said.

But he said the cable companies have been rushing to develop alternative solutions since trouble began brewing at Excite@Home. For the cable companies, with all the questions about Excite@Home's future, the relationship wasn't ideal, Harris said.

"If I'm Cox or Comcast, it doesn't make much sense for me to add a customer on the @Home platform and then have to move them off of it in short order," Harris said.

Conceived as a high-speed Net access operation, Excite@Home soared to the loftiest reaches with the rest of the Net's highfliers. From there the company quickly expanded its own notion of itself, purchasing Net media properties such as the Excite Web portal and Blue Mountain Arts in a bid to create an online empire akin to America Online.

Since its inception, Excite@Home has operated under an awkward ownership see Special report: Excite@Home marriage doomed at the altar? and governance structure that included significant input from three major cable operators: AT&T, Cox Communications and Comcast. AT&T inherited its @Home stake and board representation when it completed its acquisition of cable TV leader Tele-Communications Inc. in 1999.

In an attempt to provide content that would complement its high-speed connections, @Home bought the Excite Web portal for $6.7 billion in January 1999. Also as part of this strategy, the company in 1999 spent $780 million for Blue Mountain Arts, a provider of online greeting cards.

But the pipes-and-content strategy failed as online advertising revenue shriveled and investors fled Net stocks. As a result, Excite@Home went through several management shake-ups and strategy shifts, all of which failed to pull it out of a downward spiral.

Still, Excite@Home is by far the largest high-speed Internet service provider in the United States, and it is among the top 10 ISPs overall when measured by subscribers alone.