Time Warner Reaches Earthlink Deal

Monday, November 20th 2000, 12:00 am

By: News On 6

WASHINGTON (AP) â€” Time Warner, striking a deal vital to its proposed merger with America Online, agreed Monday to carry AOL's chief Internet service rival, EarthLink, on its high-speed cable systems.

Time Warner's arrangement with EarthLink could satisfy antitrust regulators reviewing the merger, who had demanded that Time Warner offer an Internet provider besides AOL before the merger can close.

The Federal Trade Commission now will consider the EarthLink deal in its ongoing merger review, extending the deadline for its decision to mid-December. The merger also awaits evaluation at the Federal Communications Commission.

``This is probably the single best news for the companies' merger outlook in the last few months,'' said Scott Cleland, an analyst with The Precursor Group. ``If EarthLink is happy with its access, the FTC is very likely to be happy with the agreement.''

The deal means that subscribers to Time Warner's high-speed Web service delivered over cable lines will have two choices â€” EarthLink and AOL â€” for their online provider. Earthlink is the nation's No. 2 Internet provider.

The EarthLink arrangement won't take effect until the AOL Time Warner merger closes, which the companies now expect to happen late this year or early next year. Time Warner also must complete its negotiations to restructure an exclusive contract it currently has with Internet provider Road Runner before it can offer any other service.

But the agreement with EarthLink addresses a key government concern about the merger shutting out competition.

Time Warner delivers high-speed access over its cable lines that potentially could serve about 20 million U.S. homes, and AOL is the nation's largest Internet provider with 25 million customers.

The FTC wants assurances that other Internet providers, like EarthLink or Microsoft's MSN service, also can strike fair deals to be offered on Time Warner's cable systems.

The goal is to give consumers several options for choosing an Internet provider in the high-speed world â€” a choice they already enjoy with traditional telephone-line connections.

Earthlink had previously complained about Time Warner's conditions. Experts said that regulatory pressure helped Time Warner offer Earthlink an acceptable deal.

``Time Warner had 99 percent of the clout in that negotiation without government involvement,'' Cleland said.

EarthLink officials said Monday they were pleased with the Time Warner agreement, which ensures their service will be marketed and sold the same as AOL's service.

``We really think that this agreement addresses the issues that are of concern to the FTC,'' said Dave Baker, vice president of law and public policy for EarthLink, which has 4.6 million subscribers

Time Warner said the EarthLink deal could pave the way for relationships with other Internet providers. The company already is in talks with Juno Online Services, the nation's third largest Internet provider.

``We believe it will serve as a model for future broadband agreements between (Internet service providers) and cable companies across the country,'' said Glenn A. Britt, president of Time Warner Cable.

Gene Kimmelman of Consumer Union called the deal a good first step. But, he warned, ``we still don't know how this will be more broadly applied to other Internet service providers.''

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On the Net:

America Online corporate site: http://corp.aol.com

Time Warner: http://www.timewarner.com

EarthLink: http://www.earthlink.net