America Online took a small step Tuesday on its way to a giant footprint in the world of high-speed Internet access.
The online unit of
AOL Time Warner
said it was joining cable TV system operator
in a technical trial of broadband Internet connections over cable systems. The test, to be conducted in a Cox-owned system in
El Dorado, Ark., aims to study the logistics of offering cable subscribers a choice of high-speed Net access from several Internet service providers in a single system.
AOL's participation in the trial -- one of several such multiple-ISP tests being conducted by major cable operators -- indicates how AOL Time Warner, itself the second-largest operator of cable systems in the U.S., is counting on distribution of its high-speed
Internet service through unaffiliated cable companies.
"It's the first step toward enabling our AOL members to enjoy service as they choose to receive it," says Lou Borrelli, AOL's senior vice president for broadband.
Cox's trial also reflects how offering several high-speed ISPs over a cable system -- an arrangement that federal regulators imposed on America Online and
as a condition of their January merger -- looks to become conventional business strategy for all cable operators, not just the tightly overseen AOL.
In a recent report,
analysts said that offering cable subscribers a choice of ISPs would increase valuations for AOL Time Warner and all cable operators, and that the availability of AOL on unaffiliated systems would lead to higher margins for the service, lower rates of subscribers' dropping of AOL memberships, more usage and new revenue opportunities.
Along with the Cox trial, in which ISP
has already announced its participation, other cable operators running multiple ISP tests this year are
in Boulder, Colo., and AOL Time Warner in Columbus, Ohio. AOL Time Warner is expected to launch the multiple services as a full-fledged business later this year in some of its cable systems, featuring EarthLink,
Juno Online Services
High Speed Access
All of the ISPs hope to get a piece of the market now dominated by AT&T-controlled
, which markets its service through Cox and other cable systems, and reported North American subscription-fee revenue of $75.4 million in the first quarter.
On Tuesday afternoon, AOL shares traded at $51.50, down 29 cents, and Cox traded at $41.43, down 42 cents. Excite@Home's shares were down nearly 4% to $3.41.