The multiyear alliance between AOL and GTE gives the online giant access to high-speed digital subscriber line (DSL) Internet technology in GTE's territory, which spans 17 states in the western United States.
AOL and GTE recently joined forces in the fight for so-called open access against cable operators like AT&T. The two firms even staged a demonstration in June to prove that third-party ISP access to cable TV networks can work--something that AT&T has denied.
Today's DSL deal comes in the wake of a loss in the firms' open access fight. Although the companies' lobbying push for so-called open access laws has been successful in two municipalities, the city of San Francisco yesterday declined to immediately impose open access requirements on AT&T.
AOL claims nearly 18 million dial-up customers, but the company still wants to offer its users a faster connection to the Net, as evident in its recent broadband deals. Industry experts have said that high-speed Net connections will give online companies higher profit margins and facilitate e-commerce.
The partnership marks the fourth DSL deal that AOL, the world's largest ISP, has signed with a Baby Bell company.
Last week, AOL signed a similar DSL deal with Ameritech. AOL already had signed DSL partnerships with Bell Atlantic and SBC Communications. Rounding out its high-speed interests, AOL invested $1.5 billion in Hughes Electronics, which offers Net access via satellite with its DirectPC service.
GTE recently cut the price of its DSL service by 17 percent. AOL expects its high-speed version to cost $20 more than its regular monthly cost for dial-up access.
DSL is a high-speed, or broadband, technology that allows standard copper phone wires to carry Internet data at much faster speeds than current dial-up modems. DSL, which allows users to surf the Net and talk on the phone simultaneously, is the chief competitor to cable modems in the residential broadband Net access market.