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@Home CEO takes AOL to task

Thomas Jermoluk chides the online giant for its refusal to partner with his company, concluding that AOL "is not going to prevail" in its efforts to open and control cable lines.

The mud keeps flying between @Home and America Online.

Today, it was @Home's turn to do the slinging, when CEO Thomas Jermoluk chided AOL for its refusal to partner with his company. In an interview with CNET, Jermoluk vowed that AOL "is not going to prevail" in its efforts to open cable networks to outside access providers.

"They are just clinging desperately to their old business model, which is that they want to have complete control over the user," he said.

Despite those fighting words, Jermoluk maintained that cooperation is the best route for the two companies to take, though he charged that AOL has resisted thus far.

Jermoluk said he welcomes a partnership with AOL to cobrand content or to develop some way for each company to leverage the other's strengths.

"There's an opportunity to gain customers @Home's bullish chief here together, there's an opportunity for me to make them more profitable by cutting out their modem minute network charges, there are opportunities for us together to make other revenues and transaction revenues," Jermoluk added.

But his proposal was not without its caveats. He argued that what he sees as AOL's wishes to control the entire network are, at this point, unreasonable. @Home would rather not partner with AOL at all, he added, than become the company's "dumb pipe."

"They want to have 100 percent of the control over the subscriber, and 100 percent of the programming interface--and that's simply not a very attractive proposition for a cable company, or AT&T, or ourselves to become involved with."

The war of words between the two companies has been flaring since this summer, when AT&T acquired Tele-Communications Incorporated for $48 billion. Since TCI has voting control of @Home, AT&T's acquisition placed the telecommunications giant squarely into the broadband access game.

Shortly after the announcement, AOL chairman Steve Case issued a release calling for AT&T to open up TCI's cable lines to resellers like AOL once the deal was finalized.

In essence, opening up cable lines would allow AOL to sell high-speed Internet access to homes that subscribe to cable services like TCI's. Should that occur, AOL envisions the possibility of connecting households to one high-speed pipeline that would provide an Internet connection to various devices, such as PCs, TVs, and Internet-enabled appliances.

Cable operators, however, haven't warmed up to AOL's efforts to open up their networks to outside providers. And should AOL's drive to lobby cable operators fall short, the online giant could be forced to partner with @Home, since the cable modem service has relationships with some of the largest cable companies in the country.

"[AOL] wants to be us, because it realizes that broadband is the one industry right now that is happening," Jermoluk said.

Jermoluk said he envisions a partnership under which @Home would resell AOL's service through its "bring your own access" plan (available for $9.95 per month in addition to ISP fees), and under which the two companies would integrate content and share user bases. AOL currently charges $21.95 a month for unlimited access through its proprietary service.

@Home, however, has developed its own portal-like interface, and continues to invest between 20 percent and 30 percent of its resources into further development of that interface.

Cable modem access has been at the center of considerable controversy given that millions of homes around the country already have cable TV connections. While @Home's 210,000-member audience base currently pales in comparison to AOL's 14 million, industry analysts tout cable modems as a consumer-friendly way to establish high-speed connections to the Internet going forward.

AOL, meanwhile, has prided itself on its appeal to mass-market consumers. It may not be able to generate that same appeal in the cable modem space, however.

It certainly won't be able to become a major cable player with @Home if Jermoluk continues to thumb his nose at AOL in his efforts to explain why the online giant has yet to establish itself in that space.

"I think they were sitting there fat, dumb, and happy, thinking, 'Oh, this stuff will never work, we got a lot of time for that,'" Jermoluk said. "And suddenly they woke up...and a lot of people are asking them, 'Hey, what are you doing about [cable modem access]? It seems like that thing is growing now.'"

"And all they do is shine everybody on by saying, 'Yeah, well, we'll be there at the appropriate time if it ever goes anywhere, and we're doing trials and we're doing this....' Well, the bottom line is they're doing nothing."