RealTime IT News

AOL, Time Warner Strike New Broadband Deal

America Online and Time Warner Cable announced plans Monday that would provide a custom version of the AOL service to the cable company's Road Runner broadband users.

The move is expected to increase the media conglomerate's sagging Internet business, which has lost customers to cheaper broadband services provided by telephone companies, while helping AOL boost advertising sales.

AOL, slow to upgrade its dial-up users to faster and more durable broadband, has watched its subscription base slowly migrate to these services.

But this latest partnership with Time Warner's cable unit could help speed up the connections of current subscribers, while continuing to offer traditional AOL services. The new AOL accounts will be offered to the three million paying customers of Road Runner.

"This agreement provides another way for America Online to extend the subscriber lifetime of AOL dial-up members who want to move to broadband," AOL CEO Jonathan F. Miller said in a statement. "This partnership will also make it easier to reach a new pool of broadband consumers and monetize an even bigger broadband audience through advertising, search, commerce and select premium services."

Both companies said they would work together to migrate their existing customers toward the new offering, which is expected to roll out over the next several months, according to officials.

The new service, whose pricing will vary according to connectivity speed, will provide unlimited broadband access and 10 hours of dial-up connectivity a month.

AOL will also manage and sell advertising and search inventory for both the new offering and RoadRunner.com, according to the companies.

For its part Time Warner Cable will manage the subscription billing and customer care for its services and provide a share of the subscriber revenues to AOL.

"The deal we've disclosed is a real win for both companies and consumers," Glenn Britt, chairman and CEO of Time Warner Cable, said during a conference call.

Britt, who denied the two companies had been reluctant in the past to work together, admitted a conflict had existed over which company would sell access and which company would sell advertising. It is now clear, he said, that Time Warner will be the primary seller of Internet access, while AOL will take the lead in advertising.

"Growing our high-speed data business is a top strategic priority for Time Warner Cable," Britt said. "We are very pleased to have reached an agreement that gives both Time Warner Cable and America Online opportunities to capitalize on the migration of AOL dial-up members to broadband. This partnership will also improve the Road Runner experience by offering access to AOL's compelling broadband content, features and functionality."