A federal bankruptcy judge has allowed ExciteAtHome to shut down its cable network service by as soon as midnight Friday, but he urged the company to work out a deal with its cable customers to prevent millions from losing their Internet access.
Thomas Carlson, the U.S. Bankruptcy Court judge in San Francisco, ruled Friday in favor of ExciteAtHome's creditors, who had argued that a shutdown would force AT&T (T)-- ExciteAtHome's largest shareholder -- to pay much more than what it recently offered for ExciteAtHome's network.
Talks between Excite, its creditors and cable companies including AT&T Broadband, Cox Communications Inc. and Comcast Corp., are currently underway in an effort to possibly prevent a shutdown by the midnight deadline, attorneys at the bankruptcy court said.
The conflict over the bankrupt ExciteAtHome's broadband network is best described as a daring game of chicken between corporate interests -- with the possible victims being not the corporations themselves but their millions of cable-modem subscribers.
ExciteAtHome's creditors contend that the $307 million that AT&T offered to pay for Excite's network service is too paltry a sum, and it won't cover the millions they're owed by ExciteAtHome.
"Only the prospect of turning off the switch will unlock the true value" of ExciteAtHome's cable network, the creditors said in a brief.
But AT&T contends that even if the network is unplugged, its customers will be hurt only minimally.
"We have been building an AT&T network," said Sarah Eder, an AT&T Broadband spokeswoman, "and we will migrate the ExcietAtHome users to that network." She added that there will be a "temporary service interruption" for the estimated 800,000 AT&T users of ExciteAtHome. She also said that due to the technical challenge of the "migration," it was impossible to say how temporary.
She said the would call all of its customers to let them know what is going on in the event of a shutdown.
AT&T so far has refused to sweeten the offer that it first made when ExciteAtHome filed Chapter 11 bankruptcy in late September. In briefs leading up to Friday's crucial hearing, AT&T characterized the bondholders' threat as a form of blackmail.
The bondholders "seek to play a 'game of chicken' in which the threat of a blackout is used to extort the (cable companies) into paying yet more for AtHome's services," the company said.
In a letter Friday to the judge, FCC Chairman Michael Powell urged the court to provide for an "orderly transition" in the event it decided to discontinue service, "rather than a precipitous shutdown of ExciteAtHome, to avoid disrupting broadband service to a significant percentage of U.S. customers."
But it seems that even the possibility of a network failure has caused subscribers to worry about their Internet access.
At computer-help newsgroups on Usenet, ExciteAtHome customers were soliciting advice about what they should now do.
One woman identifying herself as Holly said: "I finally got cable access, signed up for a 2 month free trial, have about 2 weeks left on it, and heard they may be going out of business. ... What am I going to do!"
And -- in a sign that the game of chicken may backfire for both the cable companies and ExciteAtHome's creditors -- the others responded with some very simple advice: Get DSL, many suggested.
The Associated Press and Reuters contributed to this report.
