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AOL, Gateway strike deal for retail DSL

The leading Net service provider and Gateway have struck a deal to sell high-speed Internet access services out of the computer maker's retail stores.

America Online and Gateway have struck a deal to sell high-speed Internet access services out of the computer maker's retail stores.

The agreement is the latest item to come from the two companies' wide-ranging alliance, cemented last October. The service will initially be available only in San Diego and in a suburb of Baltimore, but is expected to eventually expand to other Gateway stores across the country.

"We want to see how it's working with customers first," America Online spokeswoman Wendy Goldberg said. "Then we'll look at expanding it."

America Online, the largest Internet service provider (ISP) with more than 20 million subscribers, has long sought to expand beyond its dial-up roots to offer high-speed Internet access. A year ago the ISP began signing deals with local phone carriers to offer broadband access over digital subscriber lines (DSL), but these deals still remain largely in the trial stages.

DSL is a technology that allows existing phone lines to carry high-speed Internet data and traditional voice traffic simultaneously.

Alongside its DSL efforts, AOL has fought hard to offer its proprietary service over high-speed cable networks. Last week's merger agreement with Time Warner, one of the nation's largest cable companies, will go a long way toward accomplishing that goal.

Gateway and AOL struck an $800 million alliance last fall, with an eye to boost both PC and Internet use across the nation. AOL agreed to manage ISP subscribers, while Gateway would market AOL?s flagship service.

The companies have said they plan to collaborate on other services such as home networking and information appliances, but have yet to further any plans in those areas.

Goldberg said the alliance could be extended to other broadband alternatives, such as AOL's interest in the Hughes Electronics satellite system.

"There are all kinds of things we can do as part of this relationship," she said.

The Gateway DSL trials will initially be available in Timonium, Md., and in Gateway's hometown of San Diego. Bell Atlantic and SBC Communications will provide the DSL service.

AOL is set to post its fourth-quarter earnings this afternoon after the close of trading.