Here's a sign that Americans don't believe anything that companies tell them anymore: A cable television operator feels compelled to insist that it's doing a deal in order to make money.
Yes, that's what happened Tuesday after
announced a deal with Internet service provider
The deal, which sent United Online's shares up 12% to close at $6.51 Tuesday, will make high-speed versions of United Online's low-priced Juno and NetZero services available to Comcast customers in Nashville, Tenn., and Indianapolis within 90 days, the companies said.
The deal's announcement once again raises the question of whether cable operators' allowing third-party ISPs to market broadband services over their cable plant -- "open access," as it's usually known -- is good business for cable operators, or simply a necessary step for pleasing regulators and avoiding public outcry.
That's relevant not only to Comcast, which has announced a deal to merge with
cable TV operations, but also to
AOL Time Warner
, which agreed to open access provisions as a prerequisite for marketing a broadband version of America Online on its own cable systems.
Comcast President Brian Roberts insisted to reporters Tuesday that the United Online deal wasn't just window dressing. "This is not done for anything but a commercial opportunity," he said, pointing out that the deal got done as soon as possible once the company's exclusivity agreement with Excite@Home expired. "This is a business opportunity," he added later.
And Roberts made a reasonable case that the deal was a good one for Comcast, saying that any risk that Juno or NetZero would cannibalize Comcast's existing high-speed Internet business was offset by the opportunity that United Online, as an independent marketer, could expand penetration of broadband usage in Comcast's service area. Experience with other businesses such as cellular telephony, he said, taught Comcast that the more "points of presence" there are for customers to learn about a product from creative marketers, the better off the company is.
That wasn't enough to charm Comcast shareholders. The company's stock fell 3.9% Tuesday to close at $32.31.
As for United Online, CEO Mark Goldston says the deal with Comcast met three criteria the ISP was looking for: It won't require a capital expenditure outlay from United Online, it won't require adding a lot of personnel, and it will provide a gross profit per user equal to, or better than, what it's already getting from its $9.95-per-month dial-up Internet users.
The companies didn't disclose terms of the deal, but they did say that United Online would receive advertising time on Comcast cable systems. In its fiscal quarter ended Dec. 31, United Online reported a gross profit of $4.40 per paying customer.
AOL Time Warner evidently isn't offering terms as attractive. Before Juno merged with NetZero to create United Online last year, Juno announced an agreement to offer a high-speed service on AOL Time Warner's cable systems. United Online is still reviewing that agreement, say spokespeople, but hasn't moved forward on it.