Bankruptcy judge clears way to turn off ExciteAtHome Internet service
Friday, November 30th 2001, 12:00 am
By: News On 6
SAN FRANCISCO (AP) _ A judge told bankrupt ExciteAtHome it could turn off its high-speed Internet cable service as early as Friday night, potentially affecting about 4 million subscribers across the country.
The cable companies that connect their customers to the high-speed network said they plan to appeal the decision to federal court in San Francisco as soon as possible.
Bankruptcy Judge Thomas Carlson said ExciteAtHome could reject its existing contracts with the cable companies as early as 3 a.m. EST Saturday, saying they had become ``clearly burdensome'' to the company.
The judge was unmoved by the argument that shutting down the network would harm consumers.
``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.''
Under the contracts, ExciteAtHome executives said the company was losing up to $6 million a week.
ExciteAtHome's creditors urged Carlson to unplug the service _ a request AT&T Corp., which has a controlling interest in ExciteAtHome, has likened to blackmail.
AT&T offered $307 million for the network when ExciteAtHome filed Chapter 11 bankruptcy in late September and so far has refused to sweeten the offer.
The creditors ``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 court papers.
If the service is halted, AT&T and several other major cable companies, including Comcast Corp. and Cox Communications Inc., risk losing a lucrative stream of revenue from subscribers who pay $40 to $50 a month for the high-speed service, including e-mail.
In the event of a shutdown, some cable companies have indicated that they may temporarily switch subscribers to dramatically slower dial-up modem services _ an option that rankles many customers accustomed to high-speed access.
``If they shut down, I will start looking for another service as soon as possible,'' said subscriber Todd Ambur of Fremont. ``I need Internet service all the time and there is no way I am going back to dial-up modems.''
In a letter before Friday's hearing, Federal Communications Commission Chairman Michael Powell urged the judge to provide for an ``orderly transition'' in the event he decided to discontinue service ``to avoid disrupting broadband service to a significant percentage of U.S. customers.''
Carlson expressed confidence that his ruling would force the cable companies and ExciteAtHome to settle on new terms that would avoid disruptions for consumers. Lawyers for both sides said ExciteAtHome and the cable companies would talk into the night if needed to reach a deal.
The judge said shutting down ExciteAtHome doesn't pose a risk to public health or safety, the only legal standard he could invoke to put consumers' interests before creditors'.
Some 9.8 million businesses and private customers use high-speed Internet service, and about 65 percent use cable broadband, Powell said.