Comcast, Cox strain @Home family

Comcast and Cox Communications' decision to strike out into the cable ISP frontier alone by dumping long-time partner Excite@Home leaves the three companies with nine months of awkward co-existence.

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Instead of simply packing their bags and leaving, Comcast and Cox will be sticking around until June 4, 2002, when their current distribution agreements expire. All three companies swear they'll use the period to work out their differences. Their reconciliation, however, won't be made easier by Cox's and Comcast's indication that they will actively court other ISPs and lay the back-office groundwork for their own networks.  

Cox said it has been gradually severing ties with @Home, canceling its exclusivity agreement coming due this December and slowly divesting itself of its minority financial stake in the ISP. The plan all along has been to distance Cox from @Home, but the operator hadn't planned on doing so this quickly, a Cox spokeswoman said. "The current events surrounding Excite@Home has only accelerated that plan," she said. "Our main focus is our customers and making sure their service is uninterrupted. This was a protective measure."

Comcast echoed Cox's concerns. "We felt that exercising the exit provision in our contract now was in the best interest of our customers and shareholders," said Steve Burke, president of Comcast Cable Communications, in a prepared statement. Though Comcast will continue discussions with Excite@Home about how to restructure their relationship, "we will have 950,000 customers by year-end, and we need to ensure they will continue to be well served."

While both companies claim to be entertaining new contracts with @Home, Cox and Comcast are deep into open access trials with other ISPs, some of which the operators hope to conclude when their exclusivity agreement with @Home expires. In addition, Cox said it is planning to exercise more control over its network. Though Cox wouldn't say whether it would contract with another ISP or deploy its own server and portal infrastructure by June, the Cox spokeswoman said "ultimately it will be a Cox-run network."

Mike Goodman, senior analyst for The Yankee Group, said the two may decide to follow in Charter Communications' footsteps. Charter is building its own back-office systems on much of its network, eliminating its dependence on all-in-one carriers like @Home. If Cox and Comcast do the same, Goodman said, they would only have to rely on ISPs for their portal services. It's only a question of whether the two operators have the time or the inclination to deploy the equipment by June, he said.