Ailing Excite@Home abruptly blocked its cable affiliates from adding new data customers.
The high-speed Internet provider gave affiliates
including AT&T, Comcast, Cox and Insight three hours notice on Wednesday
that they would not longer be able to add customers to the @Home system.
That means new users can't get usernames, passwords or IP address
Since virtually all systems have just one Internet provider, MSOs are badly
"They have disabled part of the provisioning system, a "new service" field in the software," said one Cox executive. "We can take an order, but we can't get into the system."
Excite@Home, which filed for Chapter 11 two weeks ago,
cited the need too conserve cash, noting that adding customers requires
"Incremental capital cost outlays".
A company executive emphasized that existing customers are not affected by the switch.
Given Excite@Home's financial condition, MSOs have seen
potential service problems coming for month. But they are reeling because their
back-up plans don't seem to be in place.
AT&T and Cox said they are taking new orders from retail customers but
pushing the installation dates out at least two weeks. The Cox executive said
the company is very close to cutting in a back-up plan.
Comcast executives couldn't be reached.
Cable operators' stock prices are heavily contingent on the pace of growth in new products, data, digital cable, and for Cox and AT&T, telephone services. Stalled data sales probably won't be lost forever, but @Home's move will clearly crimp MSO's fourth quarter results.
"If there's one thing that I find disappointing it's that the companies seem to be scrambling," said Bear Stearns & Co. media analyst Ray Katz. "Why? They should have been ready for this."
Cablevision and AOL Time Warner are immune from the problems because they don't use Excite@Home.
Morgan Stanley analyst Richard Bilotti estimates that systems serving 10% of Charter and Adelphia's high-speed Internet customers are provisioned by Excite@Home.
- John M. Higgins