AOL Time Warner banks on broadband future

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With high-speed Internet service to home computers over cable lines critical to its future growth, AOL Time Warner's America Online has a lot riding on the rollout of AOL broadband service to 20 Time Warner Cable markets Feb. 18.

Broadband is a cornerstone of AOL Time Warner's growth strategy, involving virtually every unit from Warner Bros. to Time Inc. Moving dial-up AOL customers to broadband will bring more subscriber revenue and, the company hopes, higher ad revenue.

"We think broadband will be an opportunity for advertisers. ... It's [also] a creative opportunity," said Robert Friedman, AOL president-interactive marketing.

High-speed Internet service allows advertisers to deliver more sophisticated multimedia messages, such as movie trailers, exclusive previews and information on demand.

The company launched AOL High-Speed Broadband last October in 20 markets. Of 33 million subscribers on the AOL dial-up Internet service, 4 million use AOL via broadband; that includes consumers who receive broadband over cable lines, digital satellite connection and over phone wires via digital subscriber lines.

10 million households

Microsoft Corp.'s MSN, which has 7 million subscribers, also offers high speed Internet service through MSN DSL. Telecoms such as Verizon Communications also aggressively market broadband.

According to Jupiter Media Metrix, 63 million of the nation's 107 million households were online in 2001; among online households, 10 million had broadband.

Basic dial-up AOL costs $23.90 a month. AOL's broadband offer costs $54.95 a month for both dial-up and broadband; a promotion gives one month free. "People aren't relinquishing dial-up; they're adding broadband through a cable-modem connection," said Audrey Weil, president, AOL Broadband. AOL Time Warner will advertise the service in the new markets through its properties and some paid local and national media.

AOL's broadband isn't the company's only high-speed play. Time Warner Cable also offers broadband under its Roadrunner brand and through AOL rival Earthlink. "Time Warner Cable is betting that multiple brands will drive consumers to put a broadband connection in their home," Ms. Weil said. "Our goal is to provide AOL in a high-speed manner in any way that they'd [AOL users] like to get it, and we expect to provide a variety of options."

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