Excite@Home Makes Open Moves

In what may be a prelude to opening its network to competing ISPs, Excite@Home announced that it is renegotiating its agreements with cable companies Cox and Comcast.

by Thor Olavsrud of internetnews.com [June 6, 2001]

Leading cable broadband provider Excite@Home in late April tapped Sprint veteran Patti S. Hart to serve as chairman and chief executive officer—charging her with executing on the company's renewed focus on its broadband franchise and scaling back its media operations. After a little more than a month sizing up @Home and staying out of the spotlight, Hart appears to be moving into the trenches, ready to wrestle the company back on course.

The company Tuesday announced that it is in talks with Comcast Corp. and Cox Communications Inc.—which together hold about 15 percent of Excite@Home's equity—about restructuring its commercial agreements.

The March 28, 2000 letter of agreement between @Home and the two companies allows them to provide six months notice of intent to terminate exclusivity obligations or their entire relationships with Excite@Home on June 4 and December 4, respectively. @Home said it has extended the deadline for Cox and Comcast to decide about giving notice of termination of the exclusivity provisions until June 18.

According to Matthew Harrigan, senior research analyst with Janco Partners, Hart has likely recognized that the creation of the AOL Time Warner behemoth (and the open access requirements placed upon it as conditions of approval) means the end of exclusivity agreements and a new era of open access deals.

"There aren't going to be any exclusive deals going forward," he said. Harrigan said the talks will likely spell out whether the exclusivity agreements will extend into next year or if the termination of the agreements will be accelerated to Dec. 4.

Remaining connected after leaving the home
That doesn't mean Comcast and Cox won't be working closely with @Home.

"The new contracts should solidify the long-term relationships with Cox and Comcast," Harrigan said. "I think that everyone here has ample incentives to maintain the relationships."

That's because @Home has a large first-mover advantage, with four years of experience in the space. While open access is likely to create a number of issues—billing and customer service head up the list—the network itself has already largely been built-out. And, Harrigan said, the current splits of the retail revenue—about 65 percent/35 percent—are fairly favorable to the cable multiple systems operators (MSOs).

"This is really a non-replicable network at this point," Harrigan said. "It's really too late in the game to create such a large network without having a lot of growing pains."

So Hart may have stayed largely silent for the past month, but Harrigan said it is likely that she simply wants to solidify the MSO position before going on the offensive.

"I think clearly they're trying to get some things done very quickly to stabilize their position," Harrigan said. "I think she's waiting until she has some concrete announcements to make and everything has firmed up a little bit."

Meanwhile, Hart has been working on @Home's executive structure. In April, then Chairman and CEO George Bell announced that the company would re-focus on its core broadband franchise and pare away deadweight media properties that didn't have a direct relationship with that core business.

From Bell to telecommunications
But it was Bell himself who led @Home into the media business. He oversaw the merger with Excite. In contrast, Hart—former president and chief operating officer of Sprint Corp.'s Long Distance Division and most recently chairman, president and CEO of Silicon Valley-based DSL provider Telocity Inc.—is telecom to the core.

Proving that point, Hart Tuesday brought in fellow Sprint alumnus Matt Jones, most recently president and CEO of real-time VoIP provider Lipstream Networks, to take over Excite@Home's newly created COO position.

"Matt's appointment signals that we are serious about operational excellence at Excite@Home," Hart said. "I worked closely with Matt at Sprint and I am confident in his ability to deliver results. He brings a wealth of skills in developing strategies, managing partnerships, and delivering bottom line results as a general manager. Matt also understands thoroughly how to manage and run a networking company from his years of experience in the industry."

At Sprint, Jones served as Long Distance Division chief of staff, with responsibilities for strategic planning, business development, alliance and partnership management and public relations. Prior to that he was vice president of national sales for Sprint PCS. He has also served as senior vice president of Sprint Canada and began his career at AT&T.

"Excite@Home has amassed the largest portfolio of broadband assets in a way that gives it a strong and unique position in its space," Jones said. "I joined the company because the potential for broadband services is enormous and yet it has just barely been tapped. In my role as chief operating officer for the company, I will look for ways to capitalize on Excite@Home's leadership position in the broadband services market and to deliver consistent, tangible results that provide value for the shareholders and the customers."

Jones will immediately take the reins of the @Home, @Work and Matchlogic divisions.

But while Jones is on the way in, two executive vice presidents are on the way out. The company said Tuesday that Byron Smith, executive vice president of the Excite Network, and Mark O'Leary, executive vice president of Broadband Services, have resigned and will leave the company in July.

—End