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@Home rollouts delayed in California

Interested consumers in the San Francisco Bay Area will be without high-speed Net service for longer than expected, as TCI says it can't keep up with demand.

AT&T's TCI cable unit says it cannot keep up with the demand for the @Home Network, forcing prospective customers in the San Francisco Bay Area to wait even after being told the service was coming soon.

About two months ago, @Home's leading cable partner, the former Tele-Communications Incorporated, sent postcards to potential customers in Foster City and Hillsborough, California, indicating that the Internet-over-cable service would soon be available.

But those people, whose high-speed appetites were whetted by that first mailing, are now receiving a second letter from the cable operator that says the service isn't ready.

"Although we are working as diligently as possible to bring this exciting new product to your neighborhood, we have encountered some unforeseen construction delays in launching the service in your area," the TCI letter reads.

The admission hints at a larger burden that besets TCI, namely an aging technology infrastructure that is being pinched by ever-increasing interactive services.

TCI has become AT&T's new Broadband & Internet Services division, following their recently completed merger. AT&T has said it will invest heavily to upgrade TCI's cable networks.

There are a number of reasons for the delays. A TCI spokesman said the slow process of stringing cable on city-controlled telephone poles has contributed to some "construction delays." As well, strong demand for the "always-on" Net access service has pushed the company to postpone service in Foster City and Hillsborough until a backlog of orders in other cities is filled.

"We've experienced a tremendous demand, and frankly our demand is so great that our backlog is averaging about seven to eight weeks in other communities," said Andrew Johnson, a spokesman for TCI of California. An @Home spokesman declined to comment.

Johnson said the demand @Home suffering cracks in the foundation? for the @Home service, spurred in part by word of mouth and recent demonstrations in shopping malls, has been particularly strong in the city of Milpitas, south of San Francisco. TCI intends to keep its limited number of installers working in the Milpitas area until the backlog is alleviated, he said.

"We're going to keep the resources focused on the South Bay communities to get that backlog down to something more reasonable," he said.

Regardless of the reasons, one thing is clear: Strong demand for the service is good for both @Home and AT&T, but only if future customers are not soured by long waits or other installation delays.

@Home recently released a new version of its software that its says will make the installation process easier and eventually allow customers to install the service themselves. But until standards-based cable modems are widely available in retail stores, cable installers will still be needed.

TCI has about 200 @Home installers in the San Francisco area, Johnson said, and is looking to hire about 800 new customer service representatives and cable modem installers in the area this year.

@Home's cable modem service uses the same coaxial network used to deliver cable television programs for its high-speed Internet access. Users can download information, without dialing in over a phone line to an Internet service provider, at speeds of between 1.5 mbps (megabits per second) and 3 mbps for about $40 per month.

The service is currently available in 40 San Francisco area communities from as far south as Milpitas to Petaluma to the north and in the East bay in Livermore and Pleasanton.

@Home finished 1998 with 331,000 subscribers, and most analysts have plans for the company to top 1 million customers and turn its first quarterly profit this year.

Cable modem services such as @Home are also facing competition from digital subscriber lines, an alternate broadband access technology that uses standard copper phone wires to deliver data at comparable high speeds. Many phone companies are pushing DSL, and as rollouts continue the technology may steal customers still waiting for cable modem services.

So far, however, cable modem services have the early lead over DSL, and some analysts say phone companies are facing a lack of qualified installation technicians. Pacific Bell has admitted that, like @Home, demand for higher speed Net connections is so intense that the Baby Bell is having trouble keeping up.

"Unfortunately these aren't the kind of skills that are coming off the shelf out of the community colleges," TCI's Johnson said.