Topic: Q and A from Excite/Athm staff
Q1. If open access makes sense for consumers now, why wait? Why shouldn't government intervene more quickly to make open access happen immediately?
A1. There are a number of reasons why immediately providing multiple ISPs access to high speed Internet services over cable is not possible, practical or necessary.
First, there are still technical challenges that must be overcome that will take some time. These technical questions include:
how to ensure that the high speed service is not degraded given the shared nature of the cable network; OSS complexity; how to solve a host of operational questions such as customer service and back-end billing systems; determining where it makes the most sense in the network to interconnect with other ISPs and what technical approach is the most viable. Second, the cable companies
that founded Excite@Home, TCI (now AT&T), Cox and Comcast, entered into an agreement under which Excite@Home was given
the exclusive right to offer high speed residential service through June 2002 to compensate for the significant risks and investments
associated with deploying broadband over the cable infrastructure. Most of our other 20 cable partners have contracts with exclusive
obligations that extend beyond June 2002. These business arrangements must be respected.
Third, it is a highly competitive marketplace and the pace of investments is accelerating. Many technologies, including digital
subscriber lines (DSL), wireless and satellite, are all vying for market share. Government intervention is unnecessary and is not in
the best interests of consumers. Government regulation would increase costs and slow the pace of broadband deployments. As
Chairman of the FCC Bill Kennard has said,
"If we've learned anything about the Internet over the last 15 years, it's that it thrived quite nicely without the intervention of
government." [Speech to National Cable TV Association, June 1999].
Q2. Is this a concession from AT&T as result of all the pressure on them to provide open access?
A2.In short, is AT&T saying "uncle?" No, the letter is not a concession due to any public pressure. It reflects statements that AT&T
has made numerous times before that it plans to negotiate business arrangements with other ISPs after our exclusivity expires.
AT&T has also stated that it plans to have a long and mutually beneficial relationship with Excite@Home in the post exclusive
period. For example, AT&T's CEO Michael Armstrong said recently that:
"Our relationship with Excite@Home has been very positive for AT&T and we will continue to have a strong, durable, and robust
relationship under our contract and beyond." (from press release announcing Excite@Home tracking stock for its media business,
11/22/99).
Q3. Does Excite@Home embrace the principles reflected in the letter to Chairman Kennard?
A3. We certainly respect the right of our cable partners to decide what business arrangements are most appropriate for them
following in the post exclusive period. We believe that the competitive marketplace is delivering real choice to consumers today, and
the letter underscores that private business negotiations will expand these choices even further. Each cable operator will have to
reach its own conclusion as to how to best proceed after our exclusivity expires.
Q4. What bearing does this have on Excite@Home's relationship with other partners? Do you expect your other partners to follow
suit and also provide access to any and all ISPs?
A4. It has little bearing on our relationship with our other partners. We have strong business relationships with all of our cable
partners today and expect that will continue long into the future. Our cable partners will decide for themselves what is best for their
own business models. AT&T's model may be somewhat different than the rest of the cable industry's, and we expect a range of
business models to emerge.
Moreover, most of our cable partners have a substantial equity interest in Excite@Home either through direct stock ownership (our
cable partners hold over 40% of our outstanding shares) or warrants. Our cable partners, therefore, have a direct financial incentive in
our long term success.
Q5. When Mindspring or any other ISP negotiates a business arrangement with AT&T, does that guarantee that AOL will get
access?
A5. The letter states that other ISPs may obtain access "at prices reasonably comparable to those offered by AT&T to any other
ISP for similar services, subject to other terms negotiated between the parties on a commercial basis." So each ISP access
agreement while perhaps similar will have to be negotiated individually.
Q6. What does the phrase "Internet Transport Services" mean? Will Excite@Home be providing some of these services?
A6. Based on our discussions with AT&T and our involvement as a technical advisor to parties that worked on the letter, "Internet
transport services" means that portions of the Excite@Home network will likely be used to carry the Internet traffic generated by the
ISPs using AT&T's cable plant. It also means that ISPs will not be connecting at the cable headend because of technical and
operational challenges associated with such an approach. Rather, ISPs will interconnect at the regional level because it is a better
solution. We look forward to continuing to build out our network in anticipation of this potential new role. We will, of course, be
compensated for providing this transport, so the opportunity presents an incremental new revenue stream for Excite@Home.
Q7. How will other ISPs connect with the AT&T cable network? Will it be at the headend or elsewhere? What are the implications for
the Excite@Home network?
A7. See answer 6 above
Q8. Was Excite@Home involved in the discussions and negotiations leading up to the letter to Kennard?
A8. While we are not a party to the letter, our co-founder and CTO, Milo Medin served as a technical advisor during the discussions.
The open access principles described in the letter reflect the understanding reached by the signators.
Q9. What does this mean as far as the 9th Circuit case regarding the Portland open access ordinance?
A9. Portland passed an ordinance requiring AT&T to allow multiple ISPs to use its cable infrastructure to provide high speed Internet
services. While we believe that Portland did not have the jurisdictional authority to pass such an ordinance and that the 9th Circuit will overturn the District Court?s decision, we hope that Portland will rethink its actions now that cable access for multiple ISPs has been promised by AT&T during the post exclusive period. Business negotiations -- not government intervention ? is the best
approach for determining how to use the cable plant for deploying high speed Internet services.
Q10. What impact will the letter have on the local cable franchise transfers and Congressional legislation?
A10. The majority of local cable franchise transfers have been completed, and we do not think it will have any impact. We also
believe that there is little traction for Congressional legislation related to mandated cable access today, and there will likely be even
less next year.
Q11. What are Excite@Home?s plans and business prospects post exclusivity? Does the company envision revenues resulting from
providing the "Internet transport services" referred to in the letter? Will Excite@Home strike broadband deals with non-cable
companies in the future?
A11. Following the expiration of our cable partners? exclusive obligations to Excite@Home (which expire between 2002 and 2006) we
expect to have strong continuing relationships with these partners. We also anticipate striking new business deals to provide
broadband services on other platforms such as wireless and DSL. In those areas where are cable partners operate, we are currently
limited to offering high speed residential Internet services using the cable facilities. The end of exclusivity will allow us to leverage
both our technology and broadband content expertise to enter new markets and serve new customers.
And yes, we do envision revenues resulting from our role in providing "Internet transport services" to other ISPs who will eventually
have access to AT&T's cable plant.
Finally, the letter to Chairman Kennard indicates that other ISPs will not be able to market directly to AT&T's cable customers that
have already chosen the Excite@Home high speed service. We have a million subscribers now and by the time our exclusive
arrangements begin to expire in June 2002 we will have many millions more.
Q12. The letter refers to a commitment from AT&T to provide consumers with "direct access to all content available on the World
Wide Web without any AT&T-imposed charge to the consumer for such content." How is that different from the content that
Excite@Home offers today? Does Excite@Home charge for content?
A12. Unlike America Online, we do not charge for content. With one click, anyone can go to any destination on the Internet. This
again contrasts with AOL, where it takes three or four steps to go from their proprietary content to the open Internet.
Q13. How is the letter related to AT&T's announcement of its wireless strategy and the ability of other ISPs to access that platform?
A13. We are also involved in AT&T?s wireless effort, as are other ISPs. AT&T may embrace some of the same principles contained
in the letter to Chairman Kennard when providing ISPs with access to its wireless facilities.
Q14. Is there anything new about the letter? Does it go beyond what AT&T and their CEO, Michael Armstrong, have said in the
past?
A14. There is nothing dramatically new in the letter. For some time, AT&T and Mr. Armstrong have said that they plan to negotiate
business agreements with ISPs for access to the cable infrastructure following the end of exclusivity with Excite@Home.
Q15. Have all the technical issues associated with giving other ISPs access been solved? If not for the exclusive contracts, how
quickly could other ISPs get access to the cable infrastructure to provide high speed Internet services?
A15. There are still substantial challenges associated with solving the technical issues associated with providing access to multiple
ISPs. It is hard to say how long it will take to solve these challenges, but such access will not be provided until the exclusivity
provisions end.
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