[email protected] Goes Wholesale; Renews Partnerships

[email protected] Wednesday extended its distribution agreements with principal cable partners AT&T Corp., Comcast Corp. and Cox Communications Inc.

AT&T (T) and
[email protected] (ATHM)
extended their relationship through 2008, while Comcast (CMCSK) and Cox (COX)
have extended their relationships through 2006.

The agreements will help facilitate the kind of relationship established by
the December 6, 1999 agreement between AT&T and MindSpring Enterprises Inc. and bring third party cable
providers to market.

The new distribution agreements reflect a major policy shift toward
embracing competitive access on cable networks. [email protected] and its cable
partners are free to focus on developing their high-speed cable Internet
services, as well as third-party wholesale services, over the coming years.

In doing so the broadband giant reorganized the governance of the
[email protected] The move enhances [email protected]’s decision-making capabilities
and its ability to capitalize on growth opportunities in the cable access
market segments.

Tom Jermoluk, [email protected] chairman, said the deals confirm that its cable
partners are committed to a long-term relationship [email protected] that would
provide consumers with diverse broadband services.

“Our leadership position in broadband enables us and our cable partners to
better pursue a wholesale business for third-party Internet Service
Providers in addition to our existing business model that will make the
cable platform even more competitive with other emerging platforms and
attract more consumers,” Jermoluk said.

Jermoluk added that the policy shift in no way threatens its cable
broadband leadership.

“We believe that as we move into the next phase of leading the broadband
revolution, we have the necessary assets to be the leaders in delivering
broadband to consumers with our cable partners and wholesale services to
third-party Internet service providers,” Jermoluk said.

C. Michael Armstrong, AT&T chairman and chief executive officer, said AT&T
can work even more effectively with [email protected] to realize its goals for
broadband cable services.

“We can extend [email protected] across access platforms, add new capabilities of
our own, and engage the creativity of third parties, such as content
providers and other Web portals, to enrich the service.” Armstrong said.

Brian L. Roberts, Comcast president, said the agreements mark progress in
expanding its broadband services.

“We have made significant progress in reducing installation time and in
expanding the online marketing, OEM, and retail channels that have
accelerated our deployment of high-speed cable Internet services,” Roberts
said. “The extension of our agreements gives us clarity and the ability to
continue our aggressive deployment of [email protected]

David Woodrow, Cox executive vice president of business development, said
the agreements mark the beginning of a new era in broadband communications.

“This is just the tip of the iceberg in terms of how broadband information,
communications, and entertainment services, combined with digital
television technologies will dramatically change the way consumers use and
view the Internet,” Woodrow said.

Specifically, AT&T extended its distribution relationship with
[email protected] through 2008 and agreed to feature the [email protected] portal on its cable
Internet service through the same period. [email protected] will als

o work with
AT&T to provide connectivity services to other Internet service
providers who want to use AT&T’s platform to deliver broadband services to
consumers.

AT&T reiterated its intention to offer a choice of multiple service
providers and portals on its high-speed Internet systems following the
June, 2002 expiration of its current exclusive arrangements with
[email protected] In addition [email protected] will work with AT&T to deliver
services to consumers via advanced TV, wireless and narrowband initiatives.

The exclusivity provisions of the Comcast and Cox distribution agreements
with [email protected] remain in effect until June 2002. Comcast and Cox have
also agreed to use [email protected] to provide platform and connectivity
services, and to feature the [email protected] portal to delivertheir high-speed
Internet services through June, 2006.

Subject to the forfeiture of certain warrants, and based on their other
business considerations, Comcast and Cox will each have the right to end
the exclusivity provisions and may also terminate the entire distribution
arrangement in June 2001.

As a result of the agreements, Comcast and Cox will give up certain veto
rights they have at the [email protected] board and their representatives will
resign from the board. AT&T will have the right to elect a majority of the
board members and [email protected] will amend its charter to allow board action
by simple majority.

[email protected]’s Jermoluk said the revised partnerships would expand
[email protected]’s current business model and create a big opportunity for the
company to expand its connectivity and content distribution services.

“Now we are ready to move into the next phase of leading the broadband
revolution,” Jermoluk said.

The agreements have been approved by a committee of the [email protected]’s
independent directors, as well as by unanimous vote of the company’s board.

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