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Monday, 1 October, 2001, 20:18 GMT 21:18 UK
Bankruptcy poses broadband debate
Excite@Home home page
AT&T's bid for Excite@Home assures users access for now
David Schepp

Excite@Home's late-Friday bankruptcy filing has left some wondering what the future holds for broadband communications in the US.

Analysts say broadband doomsayers should not read too much into Excite@Home's woes.

The firm's problems have far more to do with its internet-based roots than any of its technology for delivering the internet.

Internet users at an EZ Everything cyber café
Cable access allows users to surf the 'net far quicker than dial-up services
"The future for broadband is really terrific," says David Joyce, senior equity analyst at Miami-based Guzman & Co. "People are starting to get a taste of what all can be made available to them."

Excite@Home's decision to file for bankruptcy was not a surprise. "For months they've been looking for what to do to try to survive," he says.

Sweet deal

Excite@Home's action follows a similar move by fellow high-speed internet access provider Covad Communications.

Yet, despite these two high-profile bankruptcies, analysts see a bright future for the broadband-communications industry.

That is something AT&T, which holds a major stake in the internet firm, recognised when it entered into a definitive agreement to buy all Excite@Home's broadband assets for $307m (£208m).

AT&T's move means users of Excite@Home's services do not have to worry about an interruption in services.

And AT&T instantly acquires a large and loyal Excite@Home customer base - if its bid goes through.

AT&T has also pledged to hire a "substantial" number of Excite@Home's employees.

Big Names

AT&T Broadband's further inroads into cable-system supplied broadband services heats up competition in an industry already dominated by big names, including Earthlink, AOL Time Warner and Juno.

Mr Joyce says consumers who use broadband technology based on cable TV systems can expect an explosion of new services.

A better-quality picture and more choice of stations are just the beginning, he says.

"Over the long haul, [broadband] is going to be quite a good revenue and cash-flow generator for these cable companies."

Broadband supplied over cable TV systems is also much easier to come by, says Om Malik, senior writer for the technology magazine Red Herring.

"You have a whole series of new start-ups [that] are developing technologies to improve high-speed internet access over cable networks."

Mr Malik adds that the efforts of those new businesses mean the technology is far ahead of what digital-subscriber lines (DSL) - which use telephone networks - can offer.

Downsides

One downside to high-speed internet access, such as cable TV supplied broadband or telephone-line dedicated DSL, is the high cost.

Typically, rates for these "always-on" technologies, which do not require a phone call to connect users to the internet, are at least twice as expensive as dial-up services.

Analysts do not see that cost as an inhibitor for growth among broadband firms.

They cite the demand for video-on-demand (VOD) as an example of one technology that will drive consumers to shell out for broadband.

Currently available in select US markets, VOD holds several advantages over video tapes and pay-per-view services, including the ability to watch movies whenever the viewer chooses.

Analysts believe that as VOD becomes more widely available, the demand for high-speed access via broadband supplied over cable TV systems will soar.

Speed and certainty

Also at issue are download speeds that vary according to load for cable-supplied access.

Much like water pressure that drops when more people open spigots, the speed by which programmes load vary according to the number of users.

Analysts also say that DSL technology - for now - is more reliable than broadband access.

Lastly, while Excite@Home's broadband business for now seems assured, the fate of its excite.com Web site has yet to be determined and may yet become one more dot.com casualty.
See also:

30 Sep 01 | Business
Excite@Home files for bankruptcy
28 Sep 01 | Business
AT&T seeks sale of units
21 Aug 01 | Business
Investors desert Excite@Home
25 Jul 01 | Business
AT&T in cable talks with AOL
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