Time Warner Intensifies Contract Talks
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Time Warner officials have picked up the pace in its contract talks with national Internet service providers Juno Online Services Inc. and EarthLink Inc., it was reported Wednesday.
Time Warner is taking the three-week reprieve given to them by the Federal Trade Commission to firm up commitments necessary to gain approval for its acquisition by America Online Inc.
In order to assure federal regulators that it is doing everything to ensure a competitive market, Time Warner needs to show signed contracts with competing services. The cable company and AOL have repeatedly said market forces, not the government, should determine cable policy.
According to Gary Baker, Juno spokesperson, talks between the two companies have intensified since the FTC extended the date to announce its decision in the AOL/TW merger.
"The pace has picked up since the FTC extending its deadline, and even in the last three weeks," Baker said. "We're very close to a deal. At this time, we're not releasing any of the terms in the agreement. But, generally speaking, of course there will be some level of revenue sharing (in the agreement with TW). It will be similar in terms to our agreements with the telephone companies, which charge for online use by the minute. But broadband contracts will be determined by the number of users."
Juno is sure to contest some of the revenue-sharing clauses Time Warner is putting forth. Juno, with its free-to-pay model of Internet access, will have a hard time making high-speed cable service profitable to offer to its subscribers. Currently, its paying subscribers make up only 60 percent of its total revenues, the rest coming through its e-commerce and advertising efforts.
Mike Luftman, Time Warner vice president of corporate communications, said Juno, the Microsoft Network and RMI.NET are expected to participate in Time Warner's ongoing ISP field tests within the next 30 days. Currently only AOL, Road Runner and Compuserve are participating in the tests in Columbus, OH.
EarthLink, which in September accused Time Warner of outrageous contract terms, is also back at the negotiating table.
The number two ISP in the nation, after AOL, said the terms now being offered by Time Warner are better than previous efforts, but won't comment on negotiations, an EarthLink source reported to Reuters Wednesday.
A term agreement contract sent to internetnews.com showed Time Warner demanding 75 percent of an ISPs revenues, after a $10,000 initial fee. The terms outraged ISPs around the nation, saying the terms would effectively prevent them from joining the network.