Is Excite@Home Destined To Become Excite@AOL?

Web message boards and online news accounts have been filled with possible deals for and by the Redwood City, California-based company, which has 500,000 subscribers throughout the United States and Canada.

Web message boards and online news accounts have been filled with possible deals for and by the Redwood City, California-based company, which has 500,000 subscribers throughout the United States and Canada.

These potential blockbusters range from the selling of Excite@Home outright to online giant America Online to splitting its access and content business into separate companies.

A Bargaining Chip

I think its fate is sealed. There are forces currently at work in the marketplace that make Excite@Home a heavy bargaining chip for AT&T, the company that holds the majority stake in the high-speed Internet provider.

Let me explain. Only nine months ago, AtHome gobbled up Web portal Excite for a whopping $6.7 billion (US$). At the time, AtHome said the move was part of its strategy to become “the new media network for the 21st century.”

A few months later, through massive acquisitions, AT&T suddenly evolved into the biggest broadband player in the industry.

It appears to me that AT&T has suddenly decided that Excite@Home is no longer indispensable. This signal has been telegraphed by Excite@Home’s recent appointment of separate divisional presidents to oversee its content and Internet access interests.

You don’t have to be a genius to recognize that Excite@Home seems to be getting itself ready for an eventual sale of both divisions.

Brilliant AT&T Gambit

Since AT&T no longer needs the broadband assets of Excite@Home, it makes perfect sense to use it as a way to gain leverage over AOL. What better way to have Steve Case and Company call off the dogs than to give him a good helping of the bandwidth he so desperately needs?

Meanwhile, AOL, which is rich in content, would probably have no objections to the content side of Excite@Home being sold to a portal like Yahoo!. In one brilliant stroke, AT&T would take care of a loose end, get an infusion of cash and probably come to some sort of — if only temporary — understanding with AOL.

The Losers?

In my hypothetical scenario, it is obvious that AT&T, Yahoo! and AOL are all winners. However, as in sports, there are winners and losers in every game. In this case, I believe this deal would leave two companies smarting.

The top executives and some of the workers of Excite@Home would definitely need to polish their resumes. However, the biggest loser in the deal will be Microsoft.

Let’s face it, some industry observers claim the only thing giving Bill Gates and Company an edge over AOL is its bandwidth.

Suddenly, that edge would be gone.

What do you think? Let’s talk about it.