Where's your savior now?

The good news is that recent market studies, including an A.C. Nielsen study released last week, show that the number of broadband connections nationally has increased about 120% over the last year. The good news is that there are 18 million broadband users, and that number, though comparatively small, has been growing rapidly. The bad news is that new broadband users are in danger of running out of service providers that will give them those broadband connections.

Competitive DSL providers such as wholesale DSL companies and ISPs were once seen as the saviors of broadband. They had the service footprints that RBOCs could not match. They were quick and effective at marketing, selling and setting up their services.

Unfortunately, they couldn't do anything else right. They had business models so acutely designed to go around the RBOCs that when the RBOCs started offering DSL, these new business plans eventually proved too one-dimensional. In the end, the DSL competitors could not fight price wars with the RBOCs. In failing, companies such as NorthPoint left their hopeful new broadband subscribers stranded without a service provider.

In the wake of such failures, cable modem service providers have attempted to promote themselves as the new saviors of broadband. With advertising that criticizes the instability of DSL companies and the shortcomings of DSL service, cable modem companies have been looking to boost consumer growth in their own broadband forays and in broadband in general.

However, the potential failure of the largest cable modem provider, Excite@Home, is not doing much to keep consumer confidence intact. Post DSL apocalypse, Excite@Home certainly looked like the broadband provider that had the most to gain in wooing former DSL subscribers over to cable modem usage. As NorthPoint, Rhythms and Covad faced more problems, Excite@Home looked like it could become the broadband era's AT&T (never mind that it is actually owned by AT&T).

Yet the company now admits it does not know if it has sufficient funding to survive (see story on page 12). Its problems actually do not have much to do with its cable modem business but have much, much more to do with the fact that Excite@Home insisted on being a content provider as well as a broadband access provider.

If Excite@Home goes out of business, the news could deal a terrible blow to the broadband community. The message will be that one of the so-called saviors of broadband — and rescuer of users from DSL chaos — cannot save itself. The message will be that while broadband is neat, it is not worth the trouble.

Some users who have had DSL woes in the past already have learned that lesson. When DSL providers failed them, they went looking for alternatives and found cable modems. If cable modem providers fail them, where will they go next? Will they forget about broadband altogether?

A question being asked with disturbing frequency this year throughout the industry is: What will happen to the customers when a heavily subscribed service provider goes out of business? People are asking that question again about Excite@Home, and one of the obvious answers is that AT&T will help support customers left in the lurch. However, AT&T is barely hanging on to its own broadband properties these days, with plans for a spinoff and offers to sell.

A creeping fear is that one of the most dominant broadband service providers is about to bite the dust, and the subsequent necessary transition of customers is anything but clear. This could be the one that stops broadband progress, that halts it in its tracks and gives it a bad rap that it cannot overcome. The broadband era needs another savior. Are there any left?
Contact Dan O'Shea at doshea@primediabusiness.com.