Juno, Comcast Form Open Access Pact

The third largest cable owner agrees to put the third largest ISP on its network, assuaging open access worries before it becomes an issue. Time Warner officials call it another good example of the marketplace providing choice..

by Thor Olavsrud and Jim Wagner of internetnews.com [November 29, 2000]

Juno Online Services Inc. Wednesday forged an agreement with Comcast Cable Communications Inc., making the Internet service provider the first, in theory, to provide competitive Internet over a single cable network.

The deal between the third largest ISP in the U.S. and the third largest cable owner in the nation is expected to culminate in field trials planned for the Philadelphia in the first quarter of 2001. However, it's unclear when the tests will be completed and what competitive services will be available to Comcast customers.

Strike well timed
Comcast struck the deal at a good time, when most regulators and the Internet industry are focused on open access policies being forged by AT&T Broadband and Time Warner Inc., both of which have come under intense scrutiny by critics for delaying access to their respective cable systems.

Rob Lancaster, Internet Market Strategies analyst with The Yankee Group, said that because the deal is not a result of government pressure, the two parties were able to create an agreement on their own terms.

"The fact that it's not a deal forced by the government is interesting, and it may pave the way for other major cable companies, say a Cox Communications, to take a second look at this," Lancaster said. "The fact that they are doing it is actually a good sign for the industry. It shows that they see some value in opening their pipes to ISPs that will represent profits for them down the road."

Terms of endearment
However, Lancaster said it is still too early to assume that the deal will go beyond the testing phase, pointing out that the two companies only signed a letter of intent.

"Until we have any of the competing ISPs running on any of the cable systems, we shouldn't be overly excited," Lancaster said.

Steve Burke, Comcast president, said the Philadelphia field trials will give his company a better understanding of the ISP industry and what they want.

"This trial should help us to figure out what kinds of value-added relationships with ISPs will be most attractive to our customers," Burke said. "Based on what we learn, we are eager to move ahead with plans to offer a choice of ISPs on terms that make sense for our ISP partners and us. Partnerships done on terms that are a win/win for us and for our ISP partners will grow both of our businesses."

Big, bigger, biggest
Open cable access has come to a head with America Online's intention to acquire Time Warner. The merger, stalled by anti-trust worries at the Federal Trade Commission, would give America's largest ISP almost exclusive access to the country's second largest cable network.

Time Warner officials, also in talks with Juno to finalize an open access agreement announced at the beginning of the year, would not comment on how the deal affects current discussions with the independent ISP.

Mike Luftman, Time Warner spokesperson, said the agreement between Juno and Comcast, however, is another good example of the marketplace working to provide choice.

"It has been the company's contention since talks began with the FTC and the Federal Communications Commission that the marketplace, and not the government, should dictate policy on cable networks," Luftman said, noting that Time Warner signed a deal last week with EarthLink Inc., to provide competitive services.

Juno also has an initial agreement with Time Warner to take a part in that company's field trials in Ohio, but it is unclear as to when actual tests will take place.

"To the best of my knowledge, Time Warner has not gone ahead with that trial," Lancaster said.

However, Lancaster said the FTC may keep pressure on Time Warner to add a second ISP beyond EarthLink. That could give Juno the bargaining chip it needs to cut a favorable deal with Time Warner.

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