July 19, 2000 10:00 AM PDT

Time Warner, AOL test ways to share high-speed networks

Time Warner and America Online have begun working together to test ways to open the media conglomerate's cable network to outside Internet service providers.

The companies have begun testing high-speed versions of their online services in Columbus, Ohio, a Time Warner representative confirmed today. High-speed versions of Time Warner's Road Runner cable ISP and AOL's CompuServe and proprietary service are involved, the representative said.

The representative declined to name the other ISPs involved in the trials.

"We are testing the delivery of multiple ISPs through the cable system," the Time Warner representative said.

A mention of the trials was disclosed Monday in a filing to the Federal Communications Commission. The FCC recently filed questions in its review of the proposed merger between AOL and Time Warner, which owns the second largest cable network. Monday's filing addressed the FCC's questions about AOL's efforts on AOLTV and other access platforms, such as digital subscriber line (DSL) and satellite.

The trials mark the first instance in which the two companies have actively begun welcoming outside rivals onto Time Warner's high-speed cable network. The companies are trying to assuage regulatory concerns that the merger would stifle competition and offer consumers fewer choices of broadband carriers.

AOL and Time Warner have made gestures toward opening their cable lines once the deal closes. The companies issued a memorandum of understanding in February, stating their intention to allow rival services onto their cable lines.

Cable Internet access has become a highly contentious issue among corporate giants wrestling to offer high-speed interactive services to households. Cable allows faster Internet speeds than traditional dial-up connections via the telephone. Consumers also get always-on connections with cable, and operators can offer an array of services bundling TV programming with Internet access and even telephone.

But most operators have kept their networks closed to outside providers. Instead, many are tied to exclusive agreements with cable ISP Excite@Home or Time Warner's Road Runner. Before AOL announced its intention to acquire Time Warner, the company spearheaded the open-access debate and lobbied the government to force cable operators to open their high-speed networks. Those efforts ended after the acquisition was announced.

Some congressional leaders have expressed skepticism of AOL and Time You've got Time Warner Warner's assurances. Sen. Orrin Hatch, R-Utah, the Senate Judiciary Committee chairman, criticized the memorandum as a "promotional document" during a committee hearing in February.

Meanwhile, company executives have hinted that a deal to offer AOL service on Time Warner's cable network is near. And Wall Street analysts are expecting AOL to give further clarity to the deal when the company reports its second-quarter earnings tomorrow.

"It's highly likely we'll complete a deal before the merger and highly likely we will complete the deal this quarter," AOL chief executive Steve Case said during a conference call to Wall Street analysts in April.

 

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