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.”

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