Copyright 2001 The Washington Post
The
Washington Post
September 05, 2001, Wednesday, Final Edition
SECTION: FINANCIAL; Pg. E05
LENGTH: 503 words
HEADLINE:
AOL Time Warner Loses U.S.-Mandated Net Access Partner
BYLINE: Alec Klein, Washington Post Staff Writer
BODY: AOL Time Warner Inc. has lost one of
its key partners on high-speed Internet service, leaving the media giant in
search of a new deal to satisfy conditions imposed by the federal government in
approving its merger.
High Speed Access Corp., a small Internet service
provider, confirmed yesterday that it has pulled out of its agreement to provide
its customers Web access over AOL's Time Warner cable-television network. The
Denver firm, which has about 176,000 Internet subscribers, said it failed to
come up with the funding to pay for a content partner or market the Internet
service over cable. "Given the current capital markets situation, it's
particularly difficult to move forward," said High Speed spokesman Andy
Holdgate.
As a condition of approving the $ 112 billion merger of
America Online Inc. and Time Warner Inc., the Federal Trade Commission ordered
the combined company to open its cable network to at least three rival Internet
service providers.
The FTC, an independent antitrust agency, was
concerned about preserving competition as the Internet moves from slower
telephone links to faster access over cable lines. The deal with High Speed
Access was the latest signed by AOL Time Warner, the nation's second-largest
cable operator. It also reached agreements with EarthLink Inc. and Juno Online
Services Inc.
To replace High Speed, AOL Time Warner said it is in talks
with other Internet service providers, although it declined to identify them.
"We look forward to announcing more deals in the future," said AOL Time Warner
spokeswoman Kathy McKiernan.
AOL Time Warner plans to start offering
EarthLink over its cable system later this month, beginning in Columbus, Ohio,
and Syracuse, N.Y. Juno's service, pending FTC approval, will be offered over
AOL Time Warner's cable lines within 90 days after AOL Time Warner launches its
own Internet service over its cable network in the fall, McKiernan said. AOL
Time Warner also will have to have a third alternative provider lined up by that
time.
In recent filings with the Securities and Exchange Commission,
High Speed indicated it was having trouble raising capital to fund its
operations, which it believed would make it difficult to follow through with its
AOL Time Warner deal. High Speed is contemplating selling some assets to Charter
Communications Inc., one of its largest shareholders and a major cable
competitor to AOL Time Warner.
With High Speed's withdrawal, AOL Time
Warner removed the first FTC complaint lodged against it since its merger. In
May, the Center for Digital Democracy, a D.C. nonprofit advocacy group, asked
the FTC to look into AOL Time Warner's contract with High Speed, alleging that
it was not an independent Internet provider because it already had business ties
to AOL Time Warner.
"This is a reprieve for AOL Time Warner," said Jeff
Chester, head of the advocacy group. "They now have to show the public that they
are committed to
open access and competition."
LOAD-DATE: September 05, 2001