AOL Partners with GTE for DSL

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America Online Inc. last week said it had added GTE's
territories to its digital-subscriber-line footprint, as both GTE Corp. and Bell Atlantic
took new steps to expedite use of high-speed lines by AOL and other Internet service
providers.

AOL will deliver a high-speed version of its service over
GTE telephone networks wherever the carrier deploys asymmetric digital-subscriber-line
technology, at a premium of about $20 per month over AOL's current service rates,
officials said. "We expect to begin offering service over the GTE networks in the
late fall/early winter time frame," said AOL spokeswoman Wendy Goldberg.

AOL's first DSL service rollouts will likely occur in
Bell Atlantic territories earlier in the fall, though no launch dates have been announced,
Goldberg said. The company also plans to introduce high-speed service in territories
served by SBC Communications before the year is out.

AOL is putting together a portal, "AOL Plus,"
that will connect DSL customers with broadband-enhanced content. As described by senior
vice president George Vradenburg in a speech at the recent Wireless Communications
Association International conference in New Orleans, customers will see a "little
tower on the side of the screen wherever you are on the service that will let you see
related content that's available at faster speeds."

Customers will be able to customize their AOL Plus messages
to accommodate their individual tastes, Vrandenburg added.

Vrandenburg said high-speed access will enable new types of
advertising that allows customers to "walk in and around products." Enhanced
e-commerce and "experimental applications with high-quality voice" will also be
rolled out as AOL extends its base of high-speed-access users. This includes the use of
voice "anytime, anywhere" in online communications and to activate commands, he
said.

With AOL TV slated for introduction next year, AOL
anticipates broadband services will bring a wider base of users online, leading to a shift
to advertising as a key revenue base for the service. "Eighty percent of our revenues
are subscription based and 20 percent are from advertising," Vrandenburg said.
"We'd like to drive that to 50-50."

AOL now has high-speed access deals with carriers and other
entities, including Hughes' DirecTV, whose total market reach represents 65 percent
of U.S. households, officials said. But Vrandenburg made clear AOL is looking for many
more to achieve ubuiquitous reach, including deals with companies that provide access over
wireless-cable systems.

AOL will find that Bell Atlantic will provide some of that
additional market reach sooner than expected. The carrier, which hopes to complete its $52
billion merger with GTE by year-end, said it was accelerating DSL deployments once again,
having already stepped up its anticipated rollout schedule earlier this year.

Officials said the company's Infospeed service will be
available to 17 million qualified residential and business lines served by 700 central
office switches by the end of the year, marking a 100 percent increase over the revised
goal that was set in January.

GTE is on schedule with its DSL rollouts and has now
increased its basic consumer service access rate to 768 kilobits per second downstream/128
kbps upstream from the previous rate of 256/64 kbps, said Jeff Bolton, director of the DSL
program at GTE Network Services. The new rate is rate adaptive, meaning some users on
particularly long lines extending 16,000 feet or more from the central office will
experience lower rates, he said.

"Our tests show that only a few people at the fringes
won't get the full rate," Bolton said. Those with the better-quality copper
lines in the range of line gauges used by GTE will get 768 kbps even at the 16,000-foot
distances, he added.

GTE, using the DSL system supplied in a joint effort by
Fujitsu Network Systems Inc. and Orckit Communications Ltd., is able to push the base line
service speed up to 768 kbps from the 256 kbps rate it has been operating at through
simple software instructions, without changing out any hardware, said Skip Huster,
director of wholesale marketing for DSL products.

"We also have to raise the burst rate for our
(frame-relay backbone) system," Huster added.

Huster said GTE has also begun deploying DSL in areas
served by digital-loop carriers, which are the high-speed lines that extend the reach of
central office switches to remote neighborhoods, now representing about 20 percent of the
carrier's market base. "This will significantly impact the percentage of the
market that can receive ADSL services," he noted, adding that the percentage of
qualified lines in central offices equipped with DSL gear now stands at about 60 percent,
not including lines in DLC-served areas.

The company, which has been selling modems with
installation at a promotional price of $99, has lowered its tariff rate for use of its DSL
facilities by ISPs to $32.95, a drop of 20 percent, with significant discounts offered for
volume commitments, officials said. Customers purchasing the new 768 kbps Bronze Plus
service with Internet access from GTE's Internetworking ISP pay $49.95.

GTE has now equipped 508 central offices with DSL, on its
way to 550 by year's end. At that point, 6.1 million lines will have access to the
service, officials said.

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