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Excite@Home May Have To Call It Quits
Plazm writes: "C|net has a story (printer friendly version, of course) that just cropped up this morning about Excite@Home being in financial trouble. Will they befall the same fate as Covad and Loki? Good thing I just purchased my cable modem and broadband service through @Home last week so they could go out of business the next."
I used to work for an @Home MSO. (I forget the meaning of the acronym, basically they resell @Home internet connectivity over their own cable lines.) Well anyways, after the initial year of the 5 year service contract with @Home, a lot of them employees stopped liking them so much. In fact, a lot of the IT guys that were really happy with @Home's network layout, were getting kind of upset with their technical contacts within @Home. Stuff like poor response time, terrible email/news server uptimes. Generally, customers would bitch and bitch about miscellaneous problems with their service, and @Home would take weeks to fix them. Even minor issues would take days. (How hard is it to kill an email account and create a new one with the same name?!)
So what is the solution? Simple. You have a customer base, you have people pratically breaking your doors down to get your service, but you can't stand the ISP you're going through. Let's see...cable company with lots of money...needs high speed internet backbones...money...backbones...hey, doesn't MCI, the Bells, Sprint, Qwest, and about 100 other telco/data service companies sell internet connections??? Hey, lets get our own OC-192!
And thus, @Home doesn't get the contract renewal when the current one runs out. Not only that, but these contracts are specified in terms of geographical area, not just in terms of the companies that signed it. So, if the cable company expands (which they always are), nothing says that the new customers have to be @Home customers. The cable company can use their revunues from existing @home customers to build an independant infrastructure, and use that to independantly serve all new customers outside of the original area.
Result? @Home doesn't make enough money to cover their startup costs. And they file chapter 7 within years of initial creation.
As an @Home customer, it pisses me off that they took a solid infrastructure business and wrecked it because they wanted to be Yahoo. Broadband over cable TV lines -- simple, powerful, doable. By now they should be rich enough to found a quasi-nation and buy an aircraft carrier. Or whatever they would want to do with $10^10.
But no, instead they got feverish with dotcom mania. They really thought that megabit internet access was just a stepping stone to the real money -- banner ad revenue on their web portal. I'm not making this up, honest! That's why they spent $780 million on BlueMountain, a loss-leader greeting card site, among other dot-bombs.
So now they're low on cash and their backbone needs maintenance (duh). If they shut off cable modem service I'll have to smack someone. I'd rather commute to my office than use phone modem again.