Web Provider Excite Drops AT&T; Service

Foundering Excite@Home cut off its high-speed Internet service to more than 900,000 AT&T; cable customers early Saturday, a day after a bankruptcy judge gave the Internet provider permission to shut down its service.

The cutoff didn’t affect the company’s 2.8 million other users, whose cable providers were negotiating Saturday to retain the service. Excite@Home, which is seeking higher fees from cable providers, canceled AT&T;’s service after talks with the telecommunications giant broke off.

AT&T;, meanwhile, started rushing its high-speed Internet customers onto a new broadband network it has been building in anticipation of Excite@Home’s collapse. No Southern California customers were affected.

AT&T; officials said they shifted 86,000 customers to the new network Saturday morning, and they expect to have all customers moved within 10 days--an even faster transition than they had predicted before the negotiations broke down. The launch of the network raises questions about whether AT&T; will continue its $307-million bid to buy Excite@Home’s assets.

Excite@Home, based in Redwood City, Calif., is the leading provider of high-speed Internet service, with 3.7 million customers in North America. But mounting losses forced it to seek bankruptcy protection Sept. 30.

On Friday, a federal bankruptcy judge canceled the contracts that required the company to provide high-speed Internet service to more than a dozen cable operators. The judge gave the company permission to shut off service as early as Saturday if it could not win more lucrative deals from the operators.

A group of cable companies, including AT&T;, Comcast and Cox Communications, offered the company significantly more money than AT&T;’s original bid, but the amount and the terms didn’t satisfy all parties, a source close to the negotiations said.