News

Comcast Sets Stage for Multiple ISPs

3/03/2002 7:00 PM Eastern

Now that it's running its own cable-modem network, Comcast Corp. has wasted no time in diving into a multiple Internet-service provider arrangement.

The Philadelphia-based MSO has inked a deal with United Online Inc., which will launch high-speed service in Nashville and Indianapolis within 90 days.

Terms were not disclosed, and United Online would not say what it would charge its cable-modem customers.

The non-exclusive pact calls for United's NetZero and Juno Internet services to eventually be offered in all of Comcast's cable-modem markets.

"We feel that this is the beginning of finding creative ways to work with third parties to accelerate our cable-modem and broadband deployment throughout the country," Comcast president Brian Roberts said last Tuesday, during a conference call on the deal. "From Comcast's point of view, what Juno and NetZero can do is bring their marketing savvy to the broadband space."

Roberts said he wasn't worried that United would cannibalize Comcast's in-house service, even though it currently competes as a low-cost provider. U.S. broadband penetration now hovers at a mere 10 percent rate of penetration, Roberts noted.

"That means there is a 90 percent opportunity, and 10 percent to worry about those types of issues," he said.

AOL Time Warner Inc. has also said it doesn't think Road Runner's growth has been eroded in markets where it has allowed EarthLink Inc. to launch service over its Time Warner Cable systems.

Roberts also said he wasn't trying to appease federal regulators, who may demand multiple-ISP access assurances as part of the MSO's merger with AT&T Broadband.

Comcast has held trials with EarthLink, but that has not yet led to a deal.

A FIRST FOR UNITED

This marks the first broadband foray for United, whose NetZero and Juno claim a combined 5.6 million dial-up customers. Both are bargain ISPs that offer a limited, free service supported by advertising. For $9.95 per month, they offer a service with faster speeds and less advertising.

United Online struck a deal with Time Warner Cable in April 2001, but it has not launched service with the MSO.

Unlike EarthLink, America Online or other major online-service providers, United will not put servers, network monitoring systems or other equipment into the field. Comcast will handle installation and provisioning for United customers, CEO Mark Goldston said.

Goldston said United needed to make sure it could go broadband "without a capital expenditure outlay, without us having to add a lot of manpower to do this, and to provide a retail price point that would let us generate gross profit dollars per user that was equal to or greater than what we could generate on our $9.95 dialup service."

He would not discuss retail pricing.

"It is our intention to have a very competitive priced product in the marketplace, which is consistent with the brand imagery we have built for both NetZero and Juno," Goldston said.

The announcement comes after Comcast has largely completed migration of its cable-modem customers from the bankrupt @Home network to its own platform. The former Excite@Home Corp. is set to go dark at midnight Feb. 28.

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