Intel, NCI Close to Data Deal

Publish date:
Updated on

The soon-to-merge Time Warner Cable's Road Runner and
MediaOne Express high-speed-data services are close to completing deals with a pair of new
technology partners, including Intel Corp., sources close to the matter said.

As previously reported, the two companies have been in
talks with Network Computer Inc., the child of an Oracle Corp./Netscape Communications
Corp. union that was formerly known as Navio Communications.

Officials on all sides declined to comment on the talks
last week, but sources close to the discussions did not deny that NCI and Intel were
financial and technology partners to the deal.

Last month, Road Runner did confirm that the merged
high-speed-data company will be headquartered near Fairfax, Va., in the Dulles corridor.
Both Intel and NCI are based in Silicon Valley, but Road Runner and MediaOne said they
didn't want to move there, partly because of steep housing costs.

Rick Post, chief financial officer of U S West Media Group
(UMG), MediaOne Express and Road Runner, said last week, "This is a tricky one to get
right and to make sure that everybody understands who's going to manage what and what
the controls are.

"We keep thinking that it's going to be this
week, but that's been going on for a number of weeks," Post said.

He was silent about outside partners, except to say,
"Several are highly interested, and we want to be smart enough to certainly allow
that to happen."

If Oracle, through NCI, does enter the broadband mix via
Road Runner and MediaOne Express, it will likely be to find a market for the sub-$300
"network computers" vaunted by Oracle's CEO, Lawrence Ellison. So far, NCs
have seen little success in the retail market.

Plus, the reported closing last week of NetChannel -- an
Internet-TV company that relies on NCI for software -- could have ignited NCI's
interests in a "plan B."

Published reports last week had America Online Inc., which
is also based in Fairfax, as a possible buyer for the ailing NetChannel. But sources said
the talks were moving at a snail's pace.

A Road Runner spokeswoman warned "not to jump to
conclusions" about what she characterized as "a coincidence" -- that the
merging data services will be situated in the same area as AOL, or that the addition of
AOL to the Road Runner/MediaOne Express partnership is any type of backup plan.

The merging data services, if the deal happens, get
investment capital and strategic technology partners to assist in navigating the fledgling
ground of broadband services to personal computers and TVs.

NCI's technology platform also lines up with that of
Time Warner and MediaOne. At the Western Show last year, NCI showed its software-product
suite on Scientific-Atlanta Inc.'s Explorer 2000 line of digital boxes. Time Warner
is S-A's biggest client for that line.

Notably, S-A has not said which microprocessor it will use
for the next, more muscular version of its Explorer 2000 box. It currently uses a 54 MIPS
(millions of instructions per second) chip.

And Intel was locked out of the digital set-tops that
Tele-Communications Inc. and its "friends and family" recently ordered from
General Instrument Corp. GI instead chose processors made by Quantum Effect Design Inc.

"Anything that increases bandwidth to PCs is good news
for Intel," noted Michael Harris, senior analyst with Kinetic Strategies Inc.
"It's not like they don't have the cash to sprinkle around."

Connecting the equivalent of a fire hose of rushing data to
the backs of PCs, via broadband or xDSL (digital subscriber line) technology, will move
the Internet's bandwidth bottleneck closer to the PC, requiring consumers to continue
upgrading their computers. That's what Intel wants.

Whether or not Intel's interest in the data service
was driven by a desire to move in lockstep with Time Warner and MediaOne was unclear,
Harris said.

"It keeps their toes wet, but I'm not sure how
much it actually buys them in terms of chip sales," Harris added.

However, if the service quickly moves to an initial public
offering, as rival high-speed-data service @Home Network successfully did, any investor is
likely to be a winner.

Road Runner and MediaOne executives have said since their
December merger announcement that they wouldn't rule out an IPO.

Kent Gibbons contributed to this story.