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Microsoft ropes in another ISP

Microsoft will bundle Netcom's Net access service with Windows 95.

Right on the heels of an Internet access pact with AT&T, Microsoft and Netcom today announced a deal to jointly distribute Net access software.

As reported yesterday by CNET, the deal calls for Microsoft to bundle Netcom's Internet access service, called NetComplete, with versions of Windows 95 shipping this fall. In return, San Jose, California-based Netcom will distribute the Internet Explorer browser to users of its dial-up access service.

An AT&T spokesman said the telephone company knew that its deal with Microsoft was not an exclusive one.

In addition, Microsoft announced that its Internet Explorer Web browser will add a kind of referral feature that allows users to automatically sign up for any one of a list of Internet access provider. Microsoft said users, who will click "The Internet" icon on its Web browser, can access its Internet Referral Server by making a local call or dialing a tolll-free number from more than 42 countries worldwide. Netcom, AT&T, and MCI will be the first service providers to be offered on the service.

"Our goal is to make it as easy as possible for our customers to access the Internet," said Brad Chase, vice president of developer relations in the Internet division at Microsoft, in a prepared statement.

In something of a high-tech version of The Empire Strikes Back, the software giant is using the dual announcements as yet another way to turn up the heat on archrival Netscape in the fast-growing Web browser market.

Microsoft is of course still playing catch up with Netscape, which still commands between 70 and 80 percent of the browser market. Netscape already bundles its Navigator browser with Netcom's service and Navigator already has a Net access referral feature in its Personal Edition retail version.

But Microsoft is now leveraging its position as king of the desktop operating system to outmaneuver Netscape through the deals with Netcom and AT&T, as well as similar deals with private online services America Online, CompuServe, and Prodigy.

The Netcom agreement in particular could be a big boost for Microsoft's browser and a welcome relief for Netcom, which has been struggling to compete with telcos entering the Net access market, most noticeably AT&T. Despite announcing last week that it became the first Internet service provider to have recorded its 500,000 paid subscriber, the company also posted an $11.4 million second-quarter loss and adding that it would consider takeover offers.

Nobody has mounted a legal challenge to Microsoft's plans to leverage its clout in the PC market to the Internet. But that might change if Microsoft continues to pursue a strategy of bundling Net access software with its operating system.