 |
FREE CABLE MODEM! When You Order Internet Service with Comcast, Cox or Charter |
Comcast $100 Cash Back! Road Runner High Speed Charter Cable Internet Cox High Speed Internet Mediacom Broadband Internet |
Features: Is Anyone @Home?
The Rise and Fall of a Broadband Pioneer
Paul was confused. In early November he received a letter from AT&T Broadband, the provider of his cable modem service, indicating that financial difficulties with @Home - described as a vendor of AT&T - could result in service interruptions over the coming weeks. And sure enough, that is exactly what happened.
On November 30th, Paul lost the broadband Internet connection he had come to depend on. Several days later, he was back up (sort of), with a new service provider, new e-mail, and lots of questions. What was @Home's role in providing his service? How could the company, which claimed not only AT&T, but Comcast, Cox Communications, and Charter as its customers, cease to operate? How did this all happen?
Building @Home
In the early 1990s, executives from leading cable companies realized that they needed to develop new service offerings to increase revenues and capture new customers. High-speed Internet service, while still on the drawing board, seemed like a logical area to pursue. The World Wide Web was just coming into existence, consumers were adopting electronic services - including e-mail and on-line shopping - at a growing rate, and the cable plant that companies like AT&T and Comcast had collectively invested billions to build reached a majority of homes with a connection large enough to handle high-speed traffic.
The only problem was, cable companies little experience in the new area of Internet connectivity. As a result, they decided to create companies to share the risk - and concentrate the business and technical talent - that would be needed to build a better highway onto the Internet. As a result, two companies were created. @Home was birthed by its parents - Cox, Comcast, TCI (now part of AT&T Broadband) - while its sibling, RoadRunner, was created by MediaOne (also now part of AT&T Broadband) and Time Warner Cable.
The mission of these new firms was simple at first - develop the technology, tools and services that would provide a compelling "broadband" experience, allowing access to the Internet at speeds of up to 100 times that of traditional "narrowband" connections.
Different Strokes
Although @Home and RoadRunner started off with the same mission, their paths slowly diverged. Each built high-speed networks that connected their partner's data centers (the place where the cable line from your house connects to a "modem bank") to the Internet. They also developed e-mail services, local content offerings, and media rich content such as streaming video and on-line music.
With the growing demand for new content, @Home made the decision to acquire the Excite portal for $6.7 billion. The goal was to offer an increasing breadth of choice and services to its consumers, making its service more compelling, and increasing the opportunity to capture revenues from e-commerce and advertising. Additional acquisitions soon followed, culminating in the purchase of Blue Mountain Arts, an on-line greeting card company with no clear business model or revenue stream, for $930 million in cash, in 2000. These acquisitions strained the finances of @Home and increased its exposure to advertising at a time when the ad market was about to implode.
RoadRunner, however, took a more conservative path. With access to the content from its corporate parent Time Warner, it did not invest as much in speculative (with the gift of hindsight) content deals. Much to the chagrin of their employees, they also remained a private company, and as such were not subject to the growth pressures of Wall Street.
The Final Chapter
@Home's problems came to a head in late 2000, when they announced that they did not have sufficient cash on hand to continue operations (see Blue Mountain Arts above). Although they were able to secure additional financing from their cable partners (by this point, the word "partner" did not describe the testy relationship between the prodigal child and its cable parents), and they received a take-over bid from AT&T Broadband, @Home's fate appeared sealed. A succession of announcements, including a de-listing from the Nasdaq, lawsuits by its creditors, AT&T Broadband's abandonment of its take-over bid, and the announcement by many of @Home's cable partners that they would build their own network, put the final nail into the coffin. In December, @Home announced that they would cease operations in February of 2002.
Although cable operators had been aware of possibility of @Home's demise, they were taken by surprise by the rapid collapse. The companies scrambled to accelerate their plans to build internal networks to replace @Home's connections to the Internet. As the first to make the change, AT&T Broadband migrated their customers to the new service - cleverly dubbed "AT&T Broadband Internet Service" - in early December. This included changing to a new e-mail account (instead of johnsmith@home.com, the new account would be johnsmith@attbi.com), migrating services onto a new, albeit initially slower (according to several customer reports) network, and a new home page. Cox and Comcast are taking things a bit slower, but both plan to transition customers to their own internal service within the next two months.
So is cable modem technology sound? Will this happen again? After the headaches caused by @Home, cable companies are likely to be more conservative in how they manage their own services (see RoadRunner above). With over 5 million customers, and many new service offerings on the horizon - such as tiered services (different speeds, each offered at a different price), VPN technology, and multiple ISP offerings - cable modem services continue to be the choice for consumers like Paul. The industry will continue to grow, but without one of the early pioneers.
So long, @Home.
