Excite Shareholders Sue Key MSOs for Damages

Excite@Home Corp. may be all but dead, but a group of shareholders say they now have the evidence to prove AT&T Corp. and other MSOs — including Cox Communications Inc. and Comcast Corp. — supplied the nails for its coffin.

The shareholders group filed a class-action securities fraud suit Nov. 12 in U.S. District Court for the Southern District of New York. They claim AT&T Corp., Cox Communications Inc., Comcast Cable Communications Inc. (Comcast Corp.'s cable unit) and Kleiner Perkins Caufield & Byers materially damaged the high-speed data service and sent it into bankruptcy oblivion.

The action is an amendment to complaints filed in March and April on behalf of shareholders, which adds information collected during a summer-long investigation, according to Christopher Gray, an attorney with Lovell Stewart Halebian LLP, the firm representing shareholders.

"When we initially filed our case, we received quite a few calls from people with information and they were able to put us in touch with other people," Gray said. "We had an attorney spend basically two months spending the majority of his time interviewing people and otherwise running down leads."

That list of witnesses apparently includes former Excite@Home CEO Patti Hart, who is not listed as a defendant in the suit.

'Steamboat Project'

The suit charges that by about February 2000, AT&T had begun work on the Steamboat Project — billed as an open-access trial in Boulder, Colo., but really a maneuver to duplicate the cable-modem network architecture, according to the suit.

During that project, the suit claims, AT&T copied, took and converted proprietary technology from Excite@Home.

"Former folks who have worked there have confirmed that there was copying of the software," Gray said.

As a result, Excite@Home was rendered "nil or superfluous," according to the suit.

Meanwhile, the cable ISP's financial status was misrepresented to shareholders, with new-subscriber projections inflated by as much as 25 to 30 percent beyond any number the company could justify, the suit claimed.

The suit also charges that Cox and Comcast decided to radically change their relationship with the service, so the MSOs could offer Internet access without the Excite@Home network. Comcast even went so far as to accelerate a secret plan in November 2000 to create its own network to compete against @Home, according to the lawsuit.

The shareholders are seeking damages and compensation, as well as punitive damages and legal fees.

When contacted, representatives for Cox, Comcast and AT&T declined to comment.

Cox and Comcast also face a federal lawsuit filed Sept. 23 by At Home Corp. itself, which now exists only in bankruptcy, in U.S. District Court in Wilmington, Del.

The suit charges the two cable MSOs violated their contracts with @Home by making deals in early 2000 that benefited the operators, but eroded the ISP's business. It names Comcast president Brian Roberts and other board members and officials as defendants. The suit also seeks a minimum $600 million in damages.