Excite@Homes Discontentment

 
 
By Rob Fixmer  |  Posted 2001-04-30 Email Print this article Print
 
 
 
 
 
 
 

Excite@Home, the pioneer in delivering high-speed access over cable television lines should today be a jewel among service providers.

Excite@Home, the pioneer in delivering high-speed access over cable television lines should today be a jewel among service providers. With 3.2 million subscribers — by far the worlds largest high-speed access provider — it should be growing fat off the insatiable appetite for bandwidth among consumers and small businesses. Instead, Excite@Home is bleeding red ink and has a split personality, still unsure if its a service provider or a content company, and doing neither particularly well.

Fortunately, the companys choice this month of a new chairman and CEO, Patti S. Hart, suggests that controlling owner AT&T may finally be willing to throw in the towel on content. Hart, 44, hails from the world of bandwidth delivery. She is the former CEO of Telocity, a provider of high-speed DSL, and was president and chief operating officer at Sprints long-distance unit.

Excite@Home has been in a tug-of-war between competing interests since it was formed in 1995. Back then, it was @Home Network, founded on the premise that television cables could be adapted for high-speed, two-way Internet access in homes. At a time when most consumer Internet access was limited to 28.8 kilobits per second, the companys first CEO, Kleiner Perkins Caufield & Byers venture capitalist William Randolph Hearst III, promised speeds more than 20 times faster.

Thanks in large part to Hearsts foresight, Kleiner Perkins had the smarts to finance a company built on an unproven technology, and it had the clout to attract crucial partners like John Malones Tele-Communications Inc., then the largest cable operator in the U.S., as well as a bevy of smaller cable companies. Among the major players, only Time Warner Cable went its own way.

But Kleiner Perkins also played a decisive role in steering @Home down a road to failure. Inspired by Yahoo!s transformation from a simple search engine into a content-rich money machine, Kleiner Perkins struggled to do the same with the Excite search engine. But when Excite consistently failed to attract visitors, crucial content partners or, in the end, a buyer, the venture capital group engineered a merger of Excite with the @Home Network. This arranged marriage certainly was no love match.

@Homes executives had argued from the beginning that to succeed, the company had to generate enough special multimedia content to demonstrate the benefits of its bandwidth, but not enough to threaten the content-obsessed cable operators on which its future depended. This delicate balance was all but destroyed by the Excite merger, which eventually put Excites CEO, George Bell, at the helm of the combined company and made content equal to bandwidth.

The waters were muddied further when AT&T Chairman C. Michael Armstrong transformed his long- distance dinosaur into a last-mile contender by buying TCI. The idea was to compete with the Bells by delivering local phone service over TV cables, along with data and TV signals. But AT&T made a series of blunders. The first was paying far too much for TCI. The second was grossly underestimating the costs of upgrading the cable networks infrastructure to carry voice, synchronous data and interactive television simultaneously into tens of millions of homes. The third — inexplicably — was continuing to emphasize the content side of Excite@Home.

When longtime cable veteran Leo Hindry publicly stated what should have been obvious to AT&T — that Excite@Home had to become a content-agnostic provider of bandwidth — he was rebuked by Armstrong and went packing. This was happening when the Federal Communications Commission was giving clear signals that it would force AT&T and Time Warner to open their networks to competing content providers anyway.

Now, the company understands that its future is not in content. "Our media operations are draining our cash resources," Chief Financial Officer Mark McEachen told analysts in explaining the companys $61.4 million loss last quarter. "We have a number of options available to us, among them the sale of our media operations."

That seems less of an option than a condition of survival.

 
 
 
 
Editor-In-Chief

rob.fixmer@ziffdavisenterprise.com

Rob joined Interactive Week from The New York Times, where he was the paper's technology news editor. Rob also was the founding editor of CyberTimes, The New York Times' technology news site on the Web. Under his guidance, the section grew from a one-man operation to an award-winning, full-time venture.

His earlier New York Times assignments were as national weekend editor, national backfield editor and national desk copy editor. Before joining The New York Times in 1992, Rob held key editorial positions at the Dallas Times Herald and The Madison (Wisc.) Capital Times.

A highly regarded technology journalist, he recently was appointed to the University of Wisconsin School of Journalism's board of visitors. Rob lectures yearly on new media at Columbia University's School of Journalism, and has made presentations at the Massachusetts Institute of Technology's Media Lab and Princeton University's New Technologies Symposium.

In addition to overseeing all of Interactive Week's print and online coverage of interactive business and technology, his responsibilities include development of new sections and design elements to ensure that Interactive Week's coverage and presentation are at the forefront of a fast-paced and fast-changing industry.

 
 
 
 
 
 
 

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