is on the Ropes
NOTE: Sussex Beat is a mix of news, analysis and commentary by Eric Magill, publisher of Sussex County Online.
Publisher's Note: Eric Magill is a customer of Mediacom's cable Internet access service.
If you're a Mediacom cable television subscriber, you've undoubtedly seen the many ads the Dagsboro office has pumped onto its cable stations trumpeting the company's digital cable and broadband Internet access services.
What you may not have noticed elsewhere are the repeated stories about the imminent demise of Mediacom's cable Internet access provider, Excite@Home, the nation's largest cable Internet access company.
Just as Mediacom's previous provider, ISPChannel, went out of business, Excite@Home and its auditors are now issuing warnings that it, too, may be gone by year's end.
Where Excite@Home's financial troubles leave Mediacom cable access subscribers is unclear.
A Mediacom representative says company officials have seen the stories about Excite@Home's financial woes and have been contacted by several cable access subscribers about their service's future.
The company, the representative said, is conducting "business as usual", hoping that Excite@Home will find a buyer before it runs out of cash by year's end.
On the positive side, a story in the San Jose (Calif.) Mercury News on Aug. 20, 2001, quoted a source close to AT&T Broadband, which owns 23 percent of Excite@Home and has a 74 percent voting interest in the company, as saying that Excite@Home cable access customers "will not be impacted."
Another analyst told the Mercury News that it is unlikely that Excite@Home's major partners -- AT&T Broadband, Comcast and Cox Communications -- would allow the company to die and lose the company's revenue stream and subscriber base.
The story also said that one option would be for the major partners to keep Excite@Home operating until subscribers could be switched to another service such as AOL Time Warner's Road Runner service. AT&T owns 25 percent of Road Runner.
On the negative side, Excite@Home lost more than $340 million on $138 million in revenue in its last quarter and company officials say it will run out of cash before the end of 2001.
Its stock is now below $1 and in danger of being delisted from the NASDAQ, which would further harm the company's chances of finding additional capital. NASDAQ requires a stock price of $3 for listing on its exchange.
According to the Mercury News story, delisting could also force Excite@Home to pay $100 million to its convertible bondholders, a requirement of a $100 million infusion from those bondholders in June.
Considering that the company has only $183.4 million in cash and $1 billion in debt, the story said Excite@Home would likely run out of moey and be forced to file for bankruptcy if it had to make that payment.
Excite@Home has laid off more than 800 workers since the beginning of the year to try to stave off financial disaster.
What all of this means for us remains to be seen, but for those who went through the last transformation from ISPChannel to Excite@Home -- broken installation CDs, unannounced outages, switching over to Excite@Home before giving subscribers the new settings -- the news is unsettling at best.
Not that Mediacom's Internet access service has ever lived up to its billing as "up to 100 times faster" for viewing web sites, but it is quite good for downloading large files or viewing online multi-media files.
The bad news for Sussex Countians is that for the foreseeable future, Mediacom is the only broadband access option in Sussex County, and its service is only available to about 10,000 of the county's 60,000 households.
Neither Verizon, which could provide broadband access through DSL, nor Comcast, which covers the rest of the county with cable services, have been able or willing to offer broadband access here.
Given the amount of local broadband content from Sussex County Online, WBOC and WMDT, national broadband content, and downloadable music files, plus the interest expressed in that content locally, you would think that one of these companies could come up with a viable broadband solution for the county's Internet access customers.
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