Earthlink jumps on Time Warner deal

Shares of Internet services provider Earthlink (Nasdaq: ELNK) were up over 12 percent Monday in pre-session trading on news of a broadband deal with Time Warner (NYSE: TWX).

The stock rose 0.86 from Friday's close to 8.00. Time Warner closed off 0.04 to 72.95 Friday

According to the deal, Earthlink, an Internet services provider, will offer its broadband Internet services over the wires of Time Warner Cable systems. Time Warner Cable is a subsidiary of Time Warner Inc.

The deal, terms of which were not released, expands EarthLink's service reach. The company's services, including high-speed Internet access, content, applications and streaming video, will reach a potential audience of 20 million homes passed by Time Warner Cable's broadband-capable cable networks.

EarthLink plans to begin offering its broadband Internet services over Time Warner Cable's wires once the cable company completes previously announced modifications to the system. According to EarthLink, this puts the date sometime in the second half of 2001.

There are, however, significant barriers to the completion of the agreement, most notably the regulatory approval of the America Online-Time Warner merger. This specific deal also requires FTC approval.

Speaking to the contentious regulatory issue of open access, Glenn A. Britt, President of Time Warner Cable called the agreement with Earthlink a win for consumers in the development of broadband cable Internet access. In a statement, Britt said the deal shows Time Warner Cable's commitment to offering customers multiple choices in broadband ISPs.