@Home is in discussions with strategic technology partners to help fund the new private company, which will be called @Home Solutions. Executives said they expect to announce technology partners by the end of the year, although no deals have yet been finalized.
As previously reported, the company, which already has agreements with 18 of the top cable companies including TCI, Cox, and Comcast, is hoping to attract the interest of smaller cable operators, those with less than 50,000 subscribers. Small- and medium-size cable operators reach about 15 million customers.
Executives are pitching the new venture to smaller cable operators at this week's Western Show, a cable industry trade show sponsored by the California Cable Television Association, and expect to announce the first cable partners during the first quarter of 1999. @Home hopes to deploy its high-speed Net-over-cable service through @Home Solutions partners by mid-1999.
Cable operators' equity stake in the new venture will be tied, in part, to the number of homes passed and subscribers each company brings to the table.
The new partnership will allow small cable operators to pool their limited resources to offer cable modems, @Home's high-speed data services, and centralized customer service and billing, in exchange for exclusive access to market the service to the cable companies' customers.
"In some of these small markets there's a tremendous need to have new media sources," said Dean Gilbert, @Home's senior vice president and general manager, at a press briefing.
Gilbert said a consortium of smaller multiple system operators (MSOs) will act together like one big cable company.
"It's not a lack of capability [to provide high-end data services]. It's about lack of scale and financial wherewithal," he said.
The venture allows @Home to expand its name recognition and brand through regional marketing efforts, rather than its current metropolitan-based marketing plan.
The deal will also allow technology partners, such as cable modem makers and set-top box manufacturers, to sell their products to a new audience of consumers and businesses in smaller cities and rural areas.
Last quarter the company had 210,000 subscribers and most analysts expect @Home to top 300,000 users by the end of the year. Meanwhile, many analysts are projecting cable modem use to expand next year with recent projections showing about 500,000 cable modem users in North America.