Excite@Home (Nasdaq: ATHM), a broadband provider, announced it has renegotiated its optical-fiber backbone capacity contract with AT&T (NYSE: T). The new arrangement will provide Excite@Home $85 million in cash and will leave intact Excite@Home's backbone operations and upgrade and expansion capabilities.
In December 1998, Excite@Home purchased from AT&T the right to use optical capacity for 20 years to create a nationwide Internet Protocol (IP) backbone. The agreement enabled Excite@Home to activate two OC-48 channels, each with 2.5 gigabits per second of capacity, across a substantial portion of the AT&T Network. The agreement also provided for significant expansion capabilities to enable Excite@Home to expand the backbone as its subscriber base grows and as fiber-optic technology improves. The company intends to upgrade sections of the network to OC-192 capacity in the near future.
Under terms of the renegotiated agreement, AT&T will refund $85 million to Excite@Home for the cancellation of the companies' original agreement and entry into a new agreement. The companies said their new capacity agreement covers Excite@Home's existing capacity and future upgrades, under which Excite@Home will pay $8.8 million per year to AT&T for the next 18 1/2-years. Separately, Excite@Home will pay AT&T $7 million in normal upgrade fees under the existing contract.
About Excite@Home:
Excite@Home offers consumers residential broadband services and businesses high-speed commercial services. For more information, visit www.excitehome.net.