Broadband rivals court @Home users

High-speed cable Internet access was supposed to be the reliable broadband choice. But that's not the case for 850,000 AT&T Broadband customers who were abruptly disconnected December 1 when network provider Excite@Home Inc. unplugged their access.

Service is being restored quickly, but many customers are still complaining of e-mail headaches and sluggish connection speeds. AT&T Broadband says it has moved almost all of its customers onto its expanded service.

But does this incident hint at cable's future? A million more Cox Communications Inc. and Comcast Cable Communications Inc. cable modem subscribers face a similar transition of service from Excite@Home to the cable operators' own networks when Excite@Home ceases operations entirely on February 28. Cox and Comcast representatives say they have plenty of time to prepare for the transition and don't predict anything near the hassles AT&T Broadband customers experienced.

Still, some industry watchers say cable broadband providers have a black eye from the Excite@Home experience. And predictably, broadband competitors are taking the opportunity to court disenfranchised cable modem customers who are experiencing broadband withdrawal. And despite their own checkered history, providers of digital subscriber lines in particular are dangling introductory deals to the severed cable customers.

"Cable's well publicized problems are nothing but good news for DSL providers," says Ernie Bergstrom, broadband analyst with the Cahners-Instat research firm.

DSL Opportunists

The nation's two largest DSL providers, SBC Communications and Verizon, claim an influx of new customers. They credit Excite@Home's bankruptcy problems and their own aggressive promotions.

When AT&T Broadband stranded its users last Saturday, SBC launched a marketing blitz that a spokesperson confirms includes a multimillion-dollar print and radio advertising campaign in 16 of its markets. The catchword of the ads is that SBC's brand of broadband is "stable."

"We want to alert cable customers to the reliability and dependability of DSL from SBC," Joe Izbrand, an SBC spokesman.

SBC is sweetening the pot in several markets. For example, new SBC customers in Illinois and Texas can get a free modem, free activation, and one month of service free of charge. Service after that is US$49.95 monthly.

"Cable's loss is our gain," says John Britton, spokesperson for SBC Pacific Bell. SBC Pacific Bell says new customer sign-ups in California have risen 300 percent in the past week. Britton directly attributes the increase to AT&T Broadband defectors looking for reliable alternatives.

Verizon says it is experiencing similar gains. "We've been barraged with new subscribers," says Briana Gowing, a Verizon spokesperson. As with SBC, Verizon cannot quantify the increased number of DSL converts who came from cable.

AT&T acknowledges that it may have lost a few customers from the outage experience, but downplays the losses.

"Surely people were looking at other options," says AT&T Broadband spokesperson Sarah Eder. "But since we've been able to get our customers back up and running so quickly, defection has been kept to a minimum."

Enticing defectors

Certainly, DSL deals can be had--including some that let you test-drive DSL for free. EarthLink is offering two months of free DSL service to former Excite@Home customers. Covad Communications announced a special $225 rebate, which covers installation fees, to any new customers that can get its service. Covad promises new customers will be up and running on its network in less than two weeks. In the meantime, it's providing free dial-up access to the new customers.

Qwest Communications is also offering a number of special DSL deals to customers affected by Excite@Home unplugging AT&T Broadband customers.

"I got a knock on my door Saturday morning by Qwest trying to sell me DSL," says Bergstrom, who lives in a Phoenix suburb.

Verizon, which has 1 million DSL customers, has hit the recruitment trail. A representative says it sent one million e-mail solicitations to @Home customers, trying to coax them to try Verizon's DSL service. It isn't clear how @Home users, who couldn't retrieve e-mail after their service stopped, received those messages. Verizon also launched a $6.5 million direct mail campaign.

Verizon has extended a deal for a free DSL modem and service installation. The first three months of access costs $29.95 monthly, then the price jumps to $49.95. If you are not satisfied with the service within the first month, you can cancel and pay nothing.

Continued caution

AT&T Broadband's Eder says consumers considering a switch should realize that "it could take ten days for a new hookup from a DSL provider. Defection from AT&T might not be the best option."

But would-be DSL converts may have another concern. That flavor of broadband service is not without its own problem-plagued past. NorthPoint, which filed for bankruptcy last March and is now out of business, is a recent dramatic example. Like the Excite@Home incident, Northpoint's failure affected other smaller providers that used its equipment.

Several other DSL providers have gone out of business and stranded customers as well. Rhythms stranded some 80,000 customers when it filed for bankruptcy last spring; Covad filed to reorganize under protection of the bankruptcy court, but continues to operate.

With broadband causing so many hassles, it might seem easier to simply move back to a modem and phone line. But that's unlikely to happen, says SBC's Britton.

"Once people get high speed access they would rather give up their morning coffee than go back to dial-up," he says.

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