EarthLink, Time Warner in Landmark Pact
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Officials said the deal is a "sign of good faith" demonstrating Time Warner's commitment to sharing its cable network with rivals. But some analysts believe that the agreement is simply a form of regulatory appeasement crafted to leverage the Federal Trade Commission into to getting Time Warner's merger review back on track.
Last week, the FTC tabled its review of America Online's bid for Time Warner. The federal agency gave Time Warner three weeks to come to terms with FTC demands. The result was, a finalized contract with EarthLink and an endorsement for open access.
Time Warner simply released a statement, which said "this agreement puts us in the position to move into the final stages of constructive discussions with the FTC."
Both Time Warner and EarthLink executives declined to disclose the financial terms of the deal.
But Garry Betty, EarthLink chief executive officer, heralded the agreement as the first step toward fulfilling the vision of open access nationwide.
"This agreement to offer EarthLink's broadband Internet services over Time Warner Cable's systems is an important advance in bringing the benefits of open access to our subscribers and all Internet users," Betty said. "We look forward to working with Time Warner Cable, and we hope to negotiate similar agreements with other cable companies."
EarthLink, the nation's second largest Internet service provider gains access to a cable system that passes more than 20 million U.S. homes.
Mike McQuary, EarthLink president, said the contract is the first step in securing open cable access for independent ISPs nationwide.
"For the first time ever, there's a signed contract with a cable company to provide high-speed services to customers who aren't cable subscribers," McQuary said. "We are guaranteed to be the first ISP in the program after the Road Runner contract expires, even before AOL.
"Time Warner will offer EarthLink services in addition to its own on a non-discriminatory basis," McQuary continued. "Cable service by ISPs will be offered by Time Warner on a wholesale basis."
McQuary also said his company will get equal billing when it comes time to market the product nationwide.
"We plan on having a staggered roll out, going market to market around the country," McQuary said. The deal also calls for EarthLink to have input in divisional marketing efforts, which gives them the authority to put promotional flyers in Time Warner cable bills.
Although Juno Online Services, Inc. recently reported that it had "intensified" talks with Time Warner to seal its deal for reselling cable services no agreement has been signed to date.
A Time Warner spokesperson said talks with Juno and other ISPs are ongoing, and proceeding as planned.