Excite@Home agreed deals with other cable companies to continue service for the next 90 days during which time these companies will migrate their customers to another ISP. The companies agreed immediately to pay a total of $355 million to keep Excite@Home in operation over this transition period. The transition service agreement is still subject to bankruptcy court approval.
The deal with the other cable companies followed a judges ruling on Friday that Excite@Home could sever its distribution agreements with all its cable company customers because the agreements were financially unfavourable to Excite. The cable companies were told that they must negotiate new agreements acceptable to Excite or risk the possibility that the service may be terminated. Since Saturday, AT&T has managed to migrate around 40% of its disconnected users to a new network.
The significance of Excite@Home’s predicament is that its network supports over one third of all broadband users in the US. The company filed for bankruptcy protection in September with debts exceeding $1.1 billion. At that time, its share price had fallen to just 15 cents, down from a peak of $55.