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@Home chief: Access prices will fall

Tom Jermoluk predicts that access fees for his high-speed Internet service could hit rock bottom as Net advertising and e-commerce dollars increase.

NEW YORK--@Home Network chief executive Tom Jermoluk today predicted that access fees for his high-speed Internet service could hit rock bottom as Net advertising and e-commerce dollars increase.

In the near future, advertising and e-commerce revenues are expected to support a larger portion of the costs of See newsmaker: Feeling @Home with CEO Tom Jermoluk delivering data-over-cable services--which could cut the prices consumers pay for services like @Home, or eventually make Net access free, Jermoluk said today at an industry conference in New York.

@Home operates a cable modem-based Internet service that claims more than 330,000 subscribers. It is closely allied with Tele-Communications Incorporated--an arrangement that gives it the clout to seed the high-speed access market and could open a variety of new roles for the company.

"We'll have free versions of this service that are integrated into the TV, because they will be 100 percent supported by [commerce] and advertising services," Jermoluk told attendees at the Jupiter Communications Consumer Online Forum.

"I think that the overall rate of access will dramatically come down?so the burden moves off the consumer and onto things where other people are paying," he added.

The company has stepped up its plan to develop advertising that takes advantage of its broadband network with the acquisition of Narrative Communications last year. The company also recently expanded its multimedia development program to include international designers.

Jermoluk also expects e-commerce revenue, especially those generated by its planned interactive TV service, to play a significant role in the company's future profits.

"How much more likely are you to buy 'Love Hits of the '90s' when it comes on at 3 a.m. if you can just click that button and buy it instead of having to get up and dial that telephone number and go get your credit card," Jermoluk asked rhetorically. "You don't have to find your credit card, you've already got it programmed in."

@Home TV on the horizon
As previously reported, the company is also developing a set-top box-based interactive TV service expected to be available by the new year. At the conference Jermoluk described features of the @Home TV service, adding that "one click" adverting and e-commerce will become easier than ever with the new service.

"It's not a lean forward thing--You can be sitting there and watching it and an ad for a nice new Mercedes comes on and you click it and buy it. Wouldn't that be nice?" Jermoluk said. "That's what we want to do by crossing over an taking this technology [to this area]. It's going to happen a lot quicker than anyone out there believes, because this technology as been built and cut its teeth in the world of the Internet."

Jermoluk has long been a proponent of integrating his high-speed Net access service to television to reach a larger user audience. Analysts have strong subscriber growth projections for the company, but many more households have access to a television than PC--making the development of a set-top box service an attractive goal.

New prices soon?
The company has said it is considering a variety of pricing models for a tiered service.

@Home's residential service currently costs about $40 per month, although pricing differs slightly among its cable partners. When Data Over Cable Service Interface Specification (DOCSIS)-compliant modems reach the retail market, and users are able to buy their own modem rather than leasing one from a cable operator, the monthly price for @Home service could drop to about $30 a month, analysts and executives have said.

But the company continues to consider different priced levels of service for its residential users, based on their differing needs. Subscribers who frequently use higher bandwidth-intensive applications, such as video-conferencing or IP telephony, may be offered a "managed solution" that offers higher levels of service, according to @Home executives.

Although details remain limited, Jermoluk today said @Home is close to offering a tiered service, at least on a trial basis.

"We're starting to talk about implementing it. And you'll probably see us trying it in different areas pretty quickly," he said.

News.com's Jim Hu reported from New York, Corey Grice reported from San Francisco.