Posted on 11/30/2001 1:22:42 PM PST by John Jorsett
A federal bankruptcy court judge in San Francisco today said that the broadband network of Excite@Home will be shutdown on Friday at midnight PST (3:00 AM EST) if a deal with its cable partners and creditors is not reached, sources at the proceedings tell Dotcom Scoop.
Excite@Home has the right under the ruling to renogiate its Master Distribution Agreements with its cable partners and with the approval of creditors, according to published reports. Excite@Home said it is losing $6 million per week keeping the network operational.
Judge Thomas Carlson said he felt that a deal could be reached quickly so that service would not be interrupted. Excite@Home representatives are currently negotiating new operating agreements with cable partners, which creditors must approve, according to the Associated Press.
The decision could affect approximately 4.1 million cable Internet access subscribers using @Home's service through partners such as AT&T, Charter Communications, Comcast and Cox.
If the network is shutdown, AT&T will attempt to migrate customers to its own existing network. Cox is in the process of finishing work on its network, but indications are that customers won't be moved until next year. Comcast is also in the process of building its own network, but there is no timetable for customers to be moved. Both Cox and Comcast have suggested that subscribers use free ISP NetZero as an alternative.
At the heart of the argument was a bondholders motion which asked that the court re-evaluate Excite@Home's broadband assets, which are set to be acquired by AT&T for $307 million. Owed almost $750 million, bondholders contended that the value of the assets is more than AT&T is offering and that fair value could only be known if the network was shutdown and cable partners were forced to find alternative providers. Today's ruling is a clear victory for bondholders.
Dotcom Scoop first reported about the possible shutdown on Nov. 8.
BUSINESS TERRORISM is when you can Chapter 11 a company, screw the stockholders, buy the infrastructure (network) assets for pennies on the dollar and then use those assets in a new company you have created to provide the same service. That is exactly what AT&T has done, but I think they have underestimated what can be swept under the rug. This fiasco will see the light of day.
What gets me is AT&T has 70% control of the Board of Directors of Excite@Home cable Internet and they have purposely run this company into the ground so they can start a fresh without the incestuous cable companies.
If this is so, then the judge did us a favor by ruling that they could shut down. All parties know that a shutdown would instantly alienate 4 million or so customers unless something else could be brought in as an instant replacement. AT&T has a replacement, but I don't know if it is physically possible to bring it online quickly. But if they maneuvered to kill @home and brought in worldnet, word would be all over the media and that would hurt them.
A shutdown threat will bring about a more fair offer by AT&T. IMHO, of course. ATT hoped that they could get some infrastructure for pennies on the dollar, but now they'll have to negotiate more fairly. On the other hand, I hope that this doesn't give @home too much leverage. If it costs too much to buy the system, nobody will buy it.
At first, I didn't think that ATT was so skillful that they could pull off such a stunt. I hadn't realized that they had such a large stake in @home. Perhaps I was mistaken.
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