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.
