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Tech Industry

Broadband leaps ahead of AOL

For the first time, broadband customers surpass the number of people who subscribe to America Online, a sign of the growing influence of high-speed Net services.

For the first time, the number of broadband subscribers in the United States has passed the amount of people who subscribe to America Online or one of its affiliates.

The swap came sometime in the last quarter, which saw an unprecedented jump in high-speed Internet subscribers. By the end of March, there were more than 26.9 million broadband subscribers in the United States, compared with 25.8 million people using AOL or one of its associated networks such as CompuServe and Netscape.

While the shift does signal considerable change in the character of the mainstream Internet, analysts say AOL's influence remains strong despite its recent corporate struggles.

"Keep in mind this is 20 companies reaching 27 million people, as opposed to one company reaching 25 million," said Bruce Leichtman, an analyst who closely follows the high-speed Net market. "Clearly a shift is happening. But you can't throw away the power that AOL has."

From its position as just one of a half-dozen "online services" in the late 1980s and early 1990s, AOL grew to become the unchallenged king of the mainstream Internet in the late 1990s, attracting close to 30 million subscribers.

Often despised by the most tech-savvy Web users, the company appealed to the broad mainstream of America with simple software that helped many technophobic citizens go online for the first time. It poured hundreds of million of dollars into marketing, sending free AOL discs in the mail, enclosing them in newspapers and cereal boxes.

The "You've got mail" recording that came with its e-mail program became a cultural icon as recognizable as Nike's Swoosh or hamburger purveyor Wendy's "Where's the beef," ultimately even sparking a major Hollywood movie.

But the company began tumbling from that pinnacle almost as soon as it completed its historic merger with Time Warner in 2001. As broadband subscriber figures began to slowly climb, Wall Street analysts and others saw the old AOL market power wouldn't translate easily into the high-speed Net world, where cable and telephone companies controlled the broadband networks.

Today, AOL has about 3.5 million high-speed Net subscribers, which includes about 2.8 million people who have broadband service elsewhere but pay for AOL content, a company spokesman said. That's under market leaders Comcast, SBC Communications and the allied Time Warner. However, AOL has finally begun co-marketing with Time Warner's Road Runner cable modem service, easing a relationship that has been rocky for years.