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@Home sick
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December 3, 2001: 7:46 p.m. ET
Broadband customers get knocked offline as AT&T walks away from negotiations with bankrupt Excite@Home.
By David Futrelle
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NEW YORK (CNN/Money) - Ever wondered what it would be like to be a pawn in a giant, weird and mysterious corporate game of chicken? Let me tell you, it ain't a walk in the park.
You'll have to forgive my mixed metaphors -- I'm a little agitated right now. This weekend, you see, nearly a million AT&T Broadband customers found themselves without Internet connections after negotiations between AT&T and Excite@Home, its bankrupt service provider, broke down in the wee hours of Saturday morning.
I was one of those customers, awakening Saturday morning -- ok, early Saturday afternoon -- to find my trusty cable modem unable to do anything but blink its little green lights at me in impotent horror. As of Monday, AT&T said it had moved nearly 40 percent of the affected customers to its own networks, with the rest scheduled to be switched by the end of the week. I'll believe it when I see it.
What happened to broadband?
The AT&T/@Home soap opera is a sad reminder of just how far away we still are from the broadband utopia some were promising only a few years ago. Two months ago, Excite@Home declared bankruptcy, overcome by a massive debt load. AT&T (T: down $0.05 to $17.44, Research, Estimates), which owned roughly a quarter of the company, offered to buy the remainder of its broadband assets for a little over $300 million.
But Excite's bondholders balked at the deal. Bondholders hoped that the threat of a shutdown would scare AT&T and @Home's other cable customers, including Cox Communications and Comcast, into coughing up more money.
Apparently AT&T decided it would be less costly to move 850,000 customers to its own network. Indeed, AT&T has spent much of the past few months preparing for negotiations to fail, furiously building out its own network over the past so that it would have the option of walking away from the bargaining table.
Meanwhile, Cox and Comcast, are still negotiating, reportedly agreeing to provide some $350 million in stopgap funding to keep @Home running while final deals are worked out. Investors on Monday were optimistic enough about the prospect for a better deal to send Excite@Home (ATHM: Research, Estimates) shares, now trading on the over-the-counter bulletin board, up nearly 7 percent - to a whopping 49 cents a share.
If AT&T can indeed move its customers over to its network as quickly as it says, and if the hastily constructed network can actually handle the crush of new users, AT&T may emerge from this mess relatively unscathed. That's relatively unscathed -- even AT&T has admitted the situation could hurt subscriber growth in the Broadband unit.
At the moment, the company has some pretty irritated customers on its hands, some of whom are threatening to swear off AT&T forever, not just for Internet access but for phone and cable service as well.
But those bitten by the broadband bug don't really have anywhere else to turn. None of us want to go back to slow dial-up access. And given all the horror stories we've all heard about DSL - the alternative to cable for high-speed access -- I rather doubt than more than a handful are even considering that switch.
Sure, AT&T could have done a much better job of warning its customers of the impending shutdown; last week, when my service was still up, I had trouble even accessing AT&T Broadband's help pages for information on what to do in the event of a shutdown.
But, oddly, I find myself much less irritated by the shutdown than, frankly, I expected to be. As an AT&T Broadband customer, I've resigned myself to service outages and lousy customer service as simply the price one pays fast Internet access. Of course, if my cable modem doesn't spring to life sometime in the next couple of days, I suspect I might just rediscover my capacity for anger. There's no wrath like the wrath of a broadband addict scorned. 
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