Disconnecting from DSL
Excite@Home business unit offers customers transition plans
By Karen Brown
from the April 16, 2001 issue of Broadband Week
Excite@Work is definitely not excited about DSL as an alternative broadband connection--especially since its partner has gone bankrupt. Prompted by the continuing implosion of competitive DSL and the bankruptcy of its primary reseller, @Work has put its approximately 2,000 DSL customers on a transition plan that generally leans away from that technology.
q@Work had decided to abandon its DSL strategy in January, even before DSL partner NorthPoint Communications filed for bankruptcy and was bought by Excite's major shareholder AT&T Corp., according to Hemant Vaidya, senior vice president and general manager of @Work.
"We had studied the financials and decided from a profitability margin perspective, it wasn't the most attractive product for us," he says. "Since the company is now clearly focused on the bottom line and starting to make a positive contribution, we did not really see a great fit."
q@Work's DSL customers only constitute less than 8 percent of its 10,000-customer base, but they do require a transition plan. To start, @Work is offering up to two months' compensation for dial-up service while they arrange for permanent broadband connections. It will also let customers keep their e-mail accounts for free during that period.
To replace the broadband connection, @Work is offering customers several options. The most heavily promoted is to convert to a discounted fractional T-1 line. The offering ranges from a symmetric 128 kilobits per second (kbps) to 736 kbps, generally under a two-year contract for between $500 and $800 monthly--compared to the going rate of $700 to $1,100, Vaidya says.
About 100 orders have come in for the fractional T-1 in the past two weeks, but "as we went into it we found out that some of the DSL customers bought full T-1s from us," he notes, even though the full T-1 was not offered at a discount.
Customers opting to continue with DSL are being referred to DSL providers XO Communications Inc. and MegaPath Networks Inc. Vaidya says a "reasonable number" of business customers have asked for those references.
Although @Work will lose those customers, referring them to rival providers is considered a fair alternative. "These guys bought service from us, they have their Internet connectivity heavily dependent and this is not something you can treat casually," Vaidya says. "We were trying to do the right thing by these guys, to the best extent we could."
Another option for NorthPoint DSL customers is to convert to a business-class cable modem where the technology is available. @Work is referring these customers to its cable operator affiliates, including Cox Communications and AT&T Broadband.
Customers wanting to regain Web hosting services also are being referred to AT&T's service, which offers a special set up with no installation costs.
q@Work's decision to back away from DSL mirrors that of its parent. Excite@Home execs in January disclosed they were backing out of a deal with DSL provider Rhythms NetConnections for residential service, citing similar concerns about the profitability and stability of the market.
"I think on a broad, industry-wide basis it does raise some issues surrounding DSL--as a technology and just how even the playing field is in DSL for all parties concerned," Vaidya says. "I see CEOs resigning and annual statements being delayed and etc. It does, I think, create a broader concern for DSL."
"We'll take another look three months, six months down the line," he notes. "If things stabilize and if we see that there is a good business opportunity for us to get back in. But we feel fairly comfortable that between our cable product and the fractional T-1 and T-1 product that we have a good set of products we can offer to small and medium businesses So we are by no means walking away from that market segment. We are just focusing on a product we feel more confident about in terms of our ability to deliver as well as in terms of our ability to make some money on that."
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