RealTime IT News

A Shift In MSN's Broadband Strategy?

In an announcement Thursday that might be a signal of its new broadband strategy and continues with an existing plan to off its content on others sites, the Microsoft Network said it will provide portal services to a major cable provider sometime next year.

Charter Communications (NASDAQ:CHTR), the fifth-largest cable operator in the U.S. with roughly 6.4 million customers in 40 states, will soon feature customized, i.e., co-branded, versions of Microsoft's (NASDAQ:MSFT) popular MSN Explorer and Hotmail, to name a few.

Stephen Silva, Charter senior vice president of corporate development and technology, said the deal gives his customers a popular portal that lends itself well to the data speeds achieved by cable Internet customers.

"This version of MSN Explorer will provide our customers easy and convenient access to streaming media, games and communications services that leverage Charter's broadband network and customer care," Silva said. "This is critical to fulfill our vision of a whole house service customized to an individual's needs within the hour."

Charter will immediately offer "content modules" and other content sections while working with Microsoft on other unspecified branding opportunities. In early 2002, Microsoft's presence will be felt when they incorporate popular items like Hotmail, Microsoft Messenger and MSN Explorer. The revamped site will also feature MSN communities like music and chat rooms.

The move is a good one for Charter, which lags well behind AOL Time Warner (NYSE:AOL), AT&T Broadband (NYSE:T), Cox Communications (NYSE:COX) and Comcast (NASDAQ:CCZ) in terms of cable Internet reach.

With approximately 419,000 cable modem subscribers, they need an immediate boost to compete with @Home and Road Runner, cable Internet service provider (ISP) shells run by the four largest cable entities. Combined, the two ISPs have garnered nearly five million high-speed data customers.

The Microsoft label brings Charter that name recognition they need, with more than 250 million visitors per month, according to Microsoft numbers. Offering a quality content service will help sway customers who might be thinking about going with the competition for high-speed Internet services.

The move, however, is even better for Microsoft, which will get the lion's share of the recognition. When Charter's customers look at their start page, it will look much like it does from MSN's home page, with cosmetic differences of course.

That makes the Charter deal similar to a deal signed Sept. 6 with the popular ESPN sports Web site, in which ESPN.com almost seems to be a MSN site.

There's no doubt it's a departure for MSN and its broadband strategy, however. Richard Bray, MSN vice president, said the move is a good one for the content and services it has to offer.

"The combination of Charter's high-speed infrastructure and our top content and services will help take Charter customers' Web experience to the next level and redefine how they experience the Internet," he said.

That's not what MSN was trying to accomplish earlier this year when it was signing up digital subscriber line (DSL) customers for Internet access. MSN was looking for a high-speed platform to migrate its 6.5 million dial up users, even managing to sign up 7,000 customers to the service.

That all changed when its provider, NorthPoint Communications, went belly up and forced the MSN DSL users to find another provider. Microsoft quickly retreated from DSL and decided on a much slower approach to broadband.

Today's announcement signals another step in its public re-emergence in the competitive sector, one that started in April, when Microsoft penned a deal with incumbent local exchange carrier (ILEC) Qwest Communications .

Lisa Gurry, a MSN product manager, said that these steps are just the first of many it plans to take in the coming months.

"I think that what you're seeing today is a first step in our relationship with Charter as well as other companies," Gurry said. "MSN is very committed to offering our optimized, high-quality content to broadband customers regardless of which Internet service they're using. What you're seeing is an increased entrance by Microsoft into the broadband space and we'll continue to demonstrate that commitment with more and more announcements over time."