America Online Inc.'s surprise, $4.2 billion buyout of
Netscape Communications Corp. did little to change AOL's need for a broadband play.
For weeks now, AOL has been pressuring the Federal
Communications Commission to regulate an opening of cable's broadband networks to outside
Internet-service providers.
Its fulcrum for that argument: The proposed AT&T Corp.
merger with Tele-Communications Inc. should be blocked unless TCI opens its networks to
alternate ISPs.
AOL's plan, if successful, could dramatically shift the
cable landscape, essentially defining the industry as a "common carrier," or bit
pipe.
But for now, it doesn't look like AOL and Netscape will use
their combined heft to gang up on cable. One Netscape executive, speaking on background,
said AOL's cable agenda "definitely hasn't been mentioned around here" since the
AOL news popped up last Monday.
Yet the AOL/Netscape merger, while strategically important
from a content and technology perspective, still does not address issues related to access
speed, analysts noted. That alone could cause AOL to continue to apply regulatory pressure
on cable.
"This still does not solve AOL's lack of a broadband
play," said Lauren Fine, a financial analyst for Merrill Lynch & Co.
That rings especially true given AOL chairman and CEO Steve
Case's newly expressed desire to extend AOL's reach beyond personal computers, to TVs and
hand-held devices.
Still, AOL and Netscape will likely spend the next few
months sorting out the details of the merger, focusing first on priority issues, like how
to combine Netscape's browser technology with AOL, which currently uses Microsoft Corp.'s
Internet Explorer.
"I'd guess that broadband access via cable is probably
further down the list for AOL now," noted Michael Harris, an analyst with
Phoenix-based Kinetic Strategies Inc.
"My own sense is that nothing will happen for at least
a few years. These aren't near-term issues," Fine said.
