Wolzien: MSOs Fear High-Speed AOL

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Washington -- Cable analyst Tom Wolzien believes cable operators fear
carrying AOL Time Warner Inc.'s high-speed Internet service because such a move
has the potential of siphoning off revenue from cable networks, video-on-demand
and voice services.

Wolzien, senior media analyst at Sanford C. Bernstein & Co., said
Wednesday that the cable-modem platform, if not managed by cable operators
properly, offered AOL Time Warner a venue for bypassing the operator to sign up
customers for a range of its powerful brands.

'The cable guys, who spent all of this money to build all of this plant, are
relegated to `dump pipe' status and don't get a piece of the
intellectual-property upside for what they are providing the consumer,' he
said.

Wolzien was a panelist at a broadband-policy conference here staged by
several organizations including Cahners Business Information, publisher of
Multichannel News.

Wolzien called cable modems a 'fundamentally disruptive technology' that AOL
Time Warner could exploit to hurt MSO revenues.

'From a cable operator's standpoint, what they are basically worried about is
that AOL, with its market power, starts coming down the side on the cable modem
and is able to start providing video-on-demand ultimately and . regular content
that we know as television and is able to offer telephony,' Wolzien said.

Wolzien said if AOL Time Warner offered movies over the Internet, the cable
operator would still capture the modem revenue, but it would lose the VOD split
when consumers used the modem instead of the set-top box to obtain movies.

'This is basically the struggle, and you see it most vividly in
video-on-demand,' he added.

AOL, which has 33 million subscribers worldwide, offers its high-speed
version on 20 Time Warner Cable systems.

Although it does not have any carriage deals with cable MSOs, AOL Time Warner
announced a technical trial with Cox Communications Inc. in November.

AOL Time Warner spokeswoman Trisha Primrose declined to comment directly on
Wolzien's statements. However, she said, the company was confident that it could
reach carriage deals with other cable operators.

'AOL is available on 20 Time Warner Cable systems, and we eventually will be
available to all cable subscribers regardless of what system they are on,'
Primrose said.

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