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Excite@Home: No fears about losing exclusivity

SAN FRANCISCO -- Excite@Home (Nasdaq: ATHM) says it's not concerned about losing cable exclusivity in two years.

Despite concerns that the cable Internet access provider's exclusive contracts start expiring after 2002, Excite@Home Chairman Tom Jermoluk on Tuesday said his company has "far more" cable networks under contract through 2004 and 2005 than run out in 2002. At Home continues to rapidly expand its total of marketable homes, he added.

"It's not something we've ever been particularly we've ever been particularly worried about," Jermoluk said, speaking at the Robertson Stephens Tech 2000 investment conference in San Francisco.

Other Internet service providers have been pushing for open access to cable networks. At Home currently has sole ISP rights to all the cable systems it reaches.

On Thursday, America Online (NYSE: AOL) and Time Warner (NYSE: TWX) said they would open the Time Warner cable system to all ISPs once their merger is completed. Jermoluk pointed to the AOL-Time Warner deal as vindication of Excite@Home's decision to combine Web content and broadband access in one company.

"It's kind of ironic that it took the validation of our competitors rather than our partners to prove us correct," Jermoluk said.

AOL's hand was forced because traditional dial-up ISPs are caught between the growth of free Internet access at the low end and broadband access providers at the high end, Jermoluk said. "It was a squeeze play and they needed to do something about it," he said.

Shares of Excite@Home have gradually slid for the last nine months, amid questions not only about open access but also about AT&T's commitment to Excite@Home. AT&T is a major stakeholder of Excite@Home; the AT&T cable system is the single largest network for Excite@Home.

Doubters should remember Excite@Home continues to meet all its growth targets, Jermoluk said. The company remains on track for 35 percent operating profits on $2 billion in revenue by 2002, he said.

Excite@Home now has under contract 72 million homes, Jermoluk said. About 24 million of those homes have been upgraded for broadband Internet access. The company had 1.1 million subscribers at the end of 1999.

This year the company will have another 10 million to 15 million upgraded homes on its network, CFO Ken Goldman said. Excite@Home's official target for subscribers is 2.5 million to 2.8 million by the end of year, although Goldman said he believes the company can exceed that goal. Revenues should grow at least 75 percent, Goldman said.>