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RealTime IT News

United Online Goes High-speed with Comcast

United Online Inc. , formed last year from the merger of Juno Online and NetZero, took its first steps into the broadband arena Tuesday by cutting a deal with Comcast Corp. to utilize that company's cable network, which serves more than 8.4 million cable subscribers nationwide.

Before the merger, Juno took some steps in the direction of Broadband, offering DSL service and going to the table with AOL Time Warner to utilize its cable network to offer a high-speed Internet service. United Online spokesman Peter Delgrosso Tuesday said a deal with AOL Time Warner is still on the table.

In any case, UOL said it will make broadband service available to Comcast customers in two test cities -- Nashville, Tenn. and Indianapolis, Ind. -- within 90 days. Comcast has 467,000 cable subscribers and 77,000 high-speed Internet subscribers in those markets. UOL also plans a national rollout of the service to anyone who can get Comcast cable, but Delgrosso said there is no schedule for that at present.

However, if there is a national rollout, UOL could have access to a lot more customers than Comcast's current 8.4 million cable subscribers, assuming regulators allow the merger of Comcast and AT&T Broadband, which serves more than 22 million cable subscribers.

"To date, United Online has been reluctant to enter the broadband marketplace," said Mark R. Goldston, chairman, president and chief executive officer of UOL. "Many of the ISPs entering the market have incurred large capital expenditures while generating gross profits per user much below their dial-up business. We are very excited to be announcing this landmark deal with a quality company like Comcast Corp. We believe it will provide a turnkey solution that should require little to no capital expenditures by United Online."

Goldston added, "We also believe the agreement will allow us to generate per-user gross profits at or in excess of our current billable dial-up offerings. Not only is this agreement an exciting step forward for United Online, it should be a complementary service for our dial-up users who may be looking to easily upgrade to a quality high-speed service from NetZero or Juno."

UOL is playing its cards close to its chest. The company said terms of the deal are confidential, adding that it will release further details, including pricing, at a later date. However, the company did disclose that the deal includes a marketing partnership in which Comcast will give UOL the ability to advertise its NetZero and Juno brands on the Comcast cable systems and through a variety of other media links on Comcast.net.

The agreement is not exclusive. Comcast will continue to provide Internet service through its Comcast High-Speed Internet ISP, which has more than 950,000 customers nationwide. Also, the company is free to create similar deals with other ISPs.

"Comcast is pleased to offer customers a choice of Internet service providers," said Brian L. Roberts, president of Comcast. "Until about two months ago, Comcast was contractually bound to a single Internet service provider. We have moved quickly to provide customers with true choice and value, while creating sound business opportunities for United Online and Comcast."

Comcast was contractually bound to cable ISP @Home Corp. until the company canceled its contracts as part of a shut down resulting from its bankruptcy. The collapse of @Home forced Comcast to quickly migrate its Internet access customers, which cost it $140 million in the fourth quarter of 2001 with more costs expected to show up this quarter.