AOL strikes third cable ISP deal
AOL Time Warner agrees to carry another Internet service provider over its cable lines, putting it one step closer to offering consumers a high-speed version of its America Online service.
Littleton, Colo.-based HSA joins EarthLink and Juno Online Services in striking deals to sell high-speed cable access on Time Warner Cable's nationwide network. HSA, which has investments from Microsoft co-founder Paul Allen's Vulcan Ventures and Charter Communications holdings, expects to begin offering service by the second half of the year, pending approval by the Federal Trade Commission.
Time Warner Cable spokesman Mike Luftman said the unit is experimenting with multiple ISP carriage in Columbus, Ohio, and expects testing to be finished by the second half of the year. Once the testing is completed, Time Warner Cable plans to launch all of the ISPs, including AOL, at the same time.
With the agreement, AOL Time Warner meets more of the minimum requirements set under an FTC consent decree. As one condition to approving the merger between AOL and Time Warner, the FTC required the company to offer EarthLink to its Time Warner Cable subscribers before it offered or marketed AOL. Once the company begins selling AOL access over cable, it must enter agreements with two additional ISPs within 90 days.
But some critics of AOL Time Warner were worried about Tuesday's agreement. Jeffrey Chester, executive director of the Center for Media Education and vocal critic of the merger, expressed concern about HSA's relationship with Allen and Charter Communications. He pointed out that Charter, one of the nation's largest cable companies, buys programming such as CNN from AOL Time Warner.
"This smacks of double dealing," Chester said. "I think what the (monitor) trustee will have to do is examine whether or not HSA is truly an independent and unaffiliated ISP given the significant financial interrelationships between HSA's owner...with AOL Time Warner."
During the yearlong merger review, AOL Time Warner came under fire from public interest groups, competitors and legislators. Many voiced concern that the company would not stick to its promises to allow other ISPs onto its cable systems. Competitors such as Walt Disney feared AOL Time Warner would favor its own content over that of others and lobbied heavily for government-implemented conditions.
Luftman said that the HSA deal would not be the last.
"We're actively engaged in discussions with additional ISPs," he said. "We look forward to announcing future agreements to offer choice."