> AOL Time Warner shifts balance of Internet power > By PC Week Staff > January 14, 2000 5:23 PM ET > http://www.zdnet.com/pcweek/stories/news/0,4153,2422713,00.html > > In a week of major changes, it was hard to determine which was bigger: > Steve Case's kickoff or Bill Gates' handoff. > > The proposed merger announced this week between America Online Inc. and > Time Warner Inc. promises a broad and pervasive alteration of the Internet > landscape, affecting not only AOL, Time Warner and their customers but > also their competitors and the technology, media and entertainment > industries. IT executives agreed, saying the proposed conglomerate proves > that the Internet has arrived for real. > > "If people didn't take the Internet seriously, we wouldn't have seen this > merger and price tag," said Brian Moura, assistant manager for the city of > San Carlos, Calif. "AOL recognizes that the modem era is over, and it must > get into the high-speed world quickly before other players attain a > critical mass." > > Just how quickly depends on several factors. AOL and Time Warner wasted no > time this week setting the wheels of change in motion. The companies > appointed a four-person transition team, headed by AOL CEO Bob Pittman, > charged with restructuring the companies' operations and future services. > > When and if those services become a reality depends on federal legislators > in Washington, who vowed to scrutinize the proposed merger. > > Already at work > > Even before the merger is completed, the partners plan to begin enhancing > services, said officials from both companies, including Time Warner > Chairman and CEO Gerald Levin and Case, chairman and CEO of AOL. The > improvements include giving Time Warner's 320,000 Roadrunner customers > access to AOL's Instant Messenger, Digital City and search capabilities. > The partners will jointly promote separate broadband Internet access > services, including cable modem, digital subscriber line, wireless and > satellite. > > The two also will make the AOL-Time Warner cable TV network available for > business customers and consumers as a cable telephony platform with > Instant Messenger capabilities, said AOL officials in Dulles, Va. > > The access issue is one that could snarl the deal within regulatory > channels now, and among competitors later. AOL, which championed open > network access, now finds it is defending itself as a potential cable > network powerhouse. > > AOL and New York-based Time Warner "are committed to offering our > customers a choice ... and we now have to turn that (commitment) into > specific policies that will result shortly in negotiations with other > (Internet service providers)," said Mike Luftman, vice president of > corporate communications at Time Warner Cable, in Stamford, Conn. > > Although Time Warner's 13 million-subscriber network was key for AOL, it's > the far-reaching content that could give the new entity a huge edge over > competitors. > > Hello, Redmond? > > Microsoft Corp. arguably faces the most pressure to react to the deal. > Observers say Microsoft's media play, including The Microsoft Network, > stands no chance against a company that combines AOL's 20 million > subscribers with the vast media holdings of Time Warner. > > "It's obviously a major threat to Microsoft," said Eric Kintz, project > manager at Roland, Berger and Partners, a management consultancy in New > York. "(AOL Time Warner) has the two pieces it needs for the future: > access to broadband and access to content." > > Microsoft's $5 billion investment in AT&T Corp. this year gives the > software company the first part of that equation but not the second. > Observers say Microsoft will try to merge with a content provider. > > Such a strategy would face intense scrutiny because of Microsoft's > antitrust trial. With reports surfacing last week that prosecutors may > seek to break up the company, Microsoft will not be an attractive partner > until that is settled. The AOL-Time Warner deal also raises question marks > about Sun Microsystems Inc. because of the Sun-Netscape Alliance, formed > after AOL acquired Netscape Communications Corp. in 1998. > > IT executives predicted that Sun, of Palo Alto, Calif., will continue a > heavy involvement in the partnership, eventually taking over all Netscape > products with the exception of the Navigator browser. > > "There's a capital 'S' in the Sun-Netscape Alliance," said Bob Whyte, > chief technology officer of alliance customer PayMyBills.com Inc., of > Pasadena, Calif. "You don't see 'AOL' in the Sun-Netscape Alliance name." > > Reported by John Rendleman, Scott Berinato, Antone Gonsalves and Grant Du > Bois > >
