News

Road Runner Gets Serious About Corporate Bandwagon

3/26/2000 7:00 PM Eastern

Road Runner last week moved from dabbling in commercial
services to a formal initiative, signaling that the cable industry is finally getting
serious about putting its high-speed-data platform to work in tapping the lucrative
business market.

The cable-data service provider, a joint venture of Time
Warner Inc., MediaOne Group Inc., Microsoft Corp., Compaq Corp. and the Advance/Newhouse
partnership, has put together a staff headed by former Ernst & Young senior manager
Mark Mercer to market a new "Road Runner Business Class" suite of
electronic-business solutions.

"Road Runner has been trying to get there for the past
year, but the timing wasn't right until now," Mercer said. "Now we believe
there's an opportunity to take what we've learned working with affiliates who have been
offering business services and apply that knowledge as a new business unit within Road
Runner."

Those affiliates -- including Time Warner Cable systems in
Tampa Bay; Portland, Maine; Columbus, Ohio, and San Diego -- have amassed more than 10,000
commercial service customers. They range from single users in the
small-office-and-home-office (SOHO) market to small businesses to a handful of big
corporations that use Road Runner to deliver telecommuting services, Mercer said.

"The target market for our services will be businesses
with 100 or fewer employees and the enterprise telecommuting sector, where we can use the
[cable] infrastructure to reach end users," Mercer added.

Road Runner and those affiliates already providing business
services have learned how to market effectively to businesses within easy reach of cable
plant, avoiding the problem of overburdening themselves by serving businesses too far from
the network, Mercer noted.

The company also can bring its experience at dealing with
value-added-resellers to the cable market. They can assist operators in linking up with
the experts that small businesses rely on to provide technical assistance with internal
networks and equipment beyond the point of Road Runner's "demarcation" -- the
cable modem.

Mercer drew a distinction between Road Runner's effort and
that of the @Work unit of Excite@Home Corp., which has offered commercial services for
more than two years, primarily over digital-subscriber lines and other non-cable
facilities.

"They're using the @Home backbone infrastructure but
have not been focused on cable, whereas we're looking at the opportunity to use cable
infrastructure where it passes office buildings, campuses and strip malls to provide
commercial services," he said.

But Excite@Home's @Work unit is once again focusing efforts
on cable after relatively futile attempts during its early operational phases.

"We're definitely seeing a big increase on the cable
side of our business," said Sue Vaillarcourt, spokeswoman for @Work. "We expect
cable to be a big piece of our revenue stream this year."

One of the basic forces behind this shift is the market
awareness of high-speed access and the resulting customer-driven demand for connections
from the small business sector. "Public awareness of the @Home service has generated
a lot of calls from businesses for service," Vaillarcourt said.

And implementation of standardized cable-data systems using
advanced headend gear that can support business-level services more efficiently has made
it possible to create tiered, guaranteed quality-of-service connections at premium prices.

Road Runner is starting out with a relatively small menu of
options, including basic high-speed "best effort" Internet access and electronic
mail. But it will move quickly to add more options, starting with hosted e-commerce
service, which is already undergoing tests in four markets and will be expanded to half a
dozen more in the months ahead, Mercer said.

By the start of the third quarter, the company expects to
add more sophisticated elements to the menu, including managed firewalls, virtual-private
networks and data storage.

"In the fourth quarter we're looking at beginning to
do some hosted application services," Mercer said. "We're in discussions with
various players in this space, where we think there's a huge opportunity to be a point of
aggregation for ASPs," referring to applications service providers.

ASPs are a fast-rising category within the ISP community.
They provide software applications such as Microsoft Office, inventory management and
human resources administration support from off-site servers over high-speed links,
alleviating the pressure on in-house personnel to manage and upgrade software packages.

"We believe the utility and gateway that Road Runner
provides for business-oriented content can also become a portal to aggregated ASP
services," Mercer said.

March