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Cox, Comcast Plan to End @Home Distribution Agreements

Excite@Home Friday confirmed that cable providers Cox and Comcast have issued official notification that they will terminate their distribution agreements with the cable broadband provider on June 4, 2002.

"This June 4 date has always been the end of the contract date," said @Home spokesperson Stephanie Xavier. "This is just formal notification from Cox and Comcast."

The company is still holding out the hope that it can reach an agreement with the two companies that will lead to a new distribution contract. @Home said it is in discussions with both Cox and Comcast concerning alternative arrangements for the continued provision of its service to Cox and Comcast cable subscribers.

"We're engaged in continuing discussions with them to secure a new arrangement," Xavier said. "They've been going on for some time. They're very complex."

While this appears to be a blow for @Home, Patricia Fusco, managing editor of InternetNews.com sister site ISP-Planet, said the termination of the distribution agreements could be a good thing for the company.

"I think this is great for @Home," Fusco said. "They're now free to sign contracts with new partners, non-cable company partners."

Fusco said a content provider -- like Microsoft Corp.'s MSN -- looking for cable access could be just the ticket.

"Longtime AOL rival MSN must be thinking, by this time next year, I could have my cable network fired up and delivering MSN Cable Access to home users across the country," she said.

And that could be a deciding factor as the cable broadband market becomes more competitive. @Home sits on AT&T Broadband's infrastructure, which is the largest cable system in the U.S. But AOL Time Warner is gearing up to enter the market soon through its own Time Warner Cable system -- the second largest system in the U.S. And both Cox and Comcast have been building up their own infrastructures, apparently with an eye to entering the market themselves. They cancelled the exclusivity of their deals with @Home earlier this year.

All that spells good news for an industry that hasn't seen much of it lately, Fusco said.

"Exclusivity doesn't work. Not too many consumer services can succeed by selling most of their services to a few clients. Doing so puts the control of your business in the hands of others," she said. "If you build an infrastructure capable of supporting mass broadband access, you better get some users on the network. The best way to do that is by securing numerous partnerships and multiple alliances with different businesses serving various markets."

Meanwhile, @Home, which is facing a severe cash crunch and the possibility that creditors may call loans due today, said its board has authorized it to retain an undisclosed investment banking firm as a financial and restructuring advisor.