Earthlink and Time Warner ink broadband agreement

EarthLink Inc., the United States’ second largest Internet service provider, will become the first major ISP to be able to provide Internet access over the cable systems of Time Warner Inc.’s cable division, the companies announced Monday.

“For the first time ever, a major cable company will allow consumers to chose from Internet service providers, not just the one the company has chosen,” said Mike McQuary, EarthLink president, during a teleconference. He later added, “It’s been an arduous battle … We applaud Time Warner for its progressiveness.”

In announcing its agreement with Earthlink, Time Warner also announced that it would extend its federal review period deadline by two weeks with America Online Inc. so the Federal Trade Commission can review the impact of the EarthLink agreement, said Time Warner spokesman Scott Miller. The merger is to be completed by the end of the year or shortly after the start of 2001.

Under the EarthLink-Time Warner agreement, approximately 20 million homes will gain access to EarthLink’s high-speed Internet package through Time Warner Cable’s system. EarthLink anticipates it will begin to provide its broadband Internet services over Time Warner Cable’s systems sometime in the second half of 2001. Service is expected once Time Warner Cable completes a restructuring of its contract with its affiliate Road Runner.

Neither Time Warner nor EarthLink disclosed any specific terms of the definitive agreement. The agreement is contingent upon the U.S. Federal Trade Commission’s approval and the closing of the Time Warner’s merger with America Online, the largest ISP in the United States.

Pricing for cable modem service through Earthlink has not been determined, McQuary said. A staggered rollout of service is expected, McQuary said.

AT&T Corp.’s Broadband division and Time Warner have been under pressure from legislators, policymakers and consumer groups to open their networks to ISPs to spur competition. In late September, Time Warner signed a binding letter of intent with Juno Online Services Inc. to grant the company cable access.

As of now Time Warner Cable has only begun trials of software and hardware to allow ISPs to utilize the company’s cable system in Columbus, Ohio. New York-based Time Warner has previously said it would take until mid-2001 before ISP’s could be on the company’s cable network, the same time frame as the EarthLink announcement. Earthlink is expected to join the Time Warner’s trials immediately, McQuary said.

Similarly, AT&T Broadband announced early this month that it had begun trials to provide ISP’s cable access in Boulder, Colorado. In the AT&T Broadband trial, a variety of national and regional ISPs, along with a few DSL (Digital Subscriber Line) ISP providers, will participate. They include RMI.Net Inc., Excite@Home Inc., EarthLink, Juno Online Services Inc., AT&T’s WorldNet, FriendlyWorks Inc., WinFire Inc. and Flashcom Inc.

Some ISP representatives, however, are not convinced that AT&T Broadband and Time Warner are moving as quickly as they can to allow ISPs access to the cable market. There is concern the trials are giving the cable heavyweights a head start in grabbing customers in the broadband market.

EarthLink saw its stock rise 98 cents or 13.79 per cent to $8.12 a share in midday trading Monday. Time Warner shares, meanwhile, slipped $2.17 or 2.97 per cent to $70.78 a share.

Time Warner, in New York, can be reached at http://www.timewarner.com/. EarthLink, in Atlanta, is at http://www.earthlink.com/.