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Excite@Home cleared to disconnect
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November 30, 2001: 7:47 p.m. ET
Bankruptcy judge clears way to turn off Excite@Home Internet service.
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NEW YORK (CNN/Money) - A bankruptcy judge cleared the way for Excite@Home to shut down its Internet cable service as early as 3 a.m. ET. Saturday, but expressed confidence that the company will strike a new deal with cable companies to prevent interruption of service for its 4.2 million subscribers.
On late Friday afternoon, Bankruptcy Judge Thomas Carlson gave Excite@Home the leeway to end the contracts after concluding they had become "clearly burdensome" to the company. Under the contracts, Excite@Home executives said the company was losing up to $6 million per week.
"The end users may be affected by these proceedings, but they are not parties to these proceedings," Carlson said. "Bankruptcy typically causes much disruption all the time, leading to loss of jobs and services to communities."
The ruling affects many of the nation's largest cable companies, including AT&T (T: Research, Estimates), Comcast Corp. (CMCSK: Research, Estimates) and Cox Communications Inc. (COX: Research, Estimates), that sell Internet access through @Home's network.
Excite@Home wants the cable companies to pay a substantially higher connection fee to use its network. Until Excite@Home's bankruptcy, the cable companies had been paying a monthly fee of $12 per subscriber. Last month, the cable companies agreed to increase the monthly fee to $20 per subscriber.
The cable companies typically charge their customers $40 to $50 per month to use the @Home network.
By forcing the cable companies to pay even more to use the high-speed Internet service, Excite@Home and the company's bondholders hope to prove the network is worth substantially more than the $307 million that AT&T has bid for it.
The bondholders have accused AT&T of using its controlling position on Excite@Home's board to steer the company into bankruptcy as part of a scheme to buy one of the nation's biggest high-speed Internet networks at a bargain price. AT&T has denied the allegations.
The judge said Excite's bondholders have the right to negotiate a better offer, but AT&T so far has not sweetened the deal it first made when Excite@Home, the nation's No.5 Internet service provider, filed chapter 11 bankruptcy in late September.
In a company statement, Excite@Home said it urges @Home customers to contact their cable companies for further information about their network services.
-- from staff and wire reports 
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