Acquiring Minds Want to Know
yesterday like a well-orchestrated dog and pony show. The cable giant showed best that it's making little effort to give 'the little guy' access to its pipes beyond pandering to government regulators who are turning up the heat over its multibillion-dollar pending mega-merger with America Online.First off, this move comes only as a direct response to skeptics at last week's Federal Communication Commission hearings. With questions swirling over Time Warner's commitment to open its pipes to competing ISPs following its merger, the company scrambled to handpick Juno. Sensing Steve Case's empty promises might not fly, a sympathizer already in America Online's hip pocket was swiftly chosen as a poster child for open access.
Early this year, Juno hopped into bed with its well-heeled rival, unveiling a co-branded version of AOL's Instant Messenger (AIM). Meanwhile, AOL was busy fending off real competition by blocking rival instant messaging services like Microsoft Network Messenger and Yahoo! Messenger. Shortly after Juno shook the IPO money tree this time last year, widespread rumors were even bantered about that America Online might buy Juno outright.
Peeking under the covers of Time Warner's LOI, a few key concerns crop up. The first thing is that Juno's broadband initiative won't be ready for prime time until Time Warner's previous commitment with Road Runner expires by 2002. Time Warner says it's trying to renegotiate that commitment, but don't expect anything earlier than early to mid-2001.
With Juno burning through $50 million a quarter and $130 million remaining in its war chest, the future is at best uncertain. I'm not saying the free ISP will go under, but trading under 10 bucks a share amidst a bevy of me-too competitors, a secondary offering won't be a gimme. The company has already saddled retail investors with one follow-on, but in the current grumpy market environment, it looks to be sink or swim. At the very least, Juno won't likely remain a dot-com bachelor by the time open access rolls around. Bottom line - Juno is either AOL's weakest rival or closest ally. Take your pick.
This latest slight of hand shouldn't come as a surprise to anyone familiar with America Online and Time Warner's ongoing shenanigans. We've seen blatant examples of abuse by the planet's largest Internet service provider since it learned to crawl. Back in the old days, the company could shrug it off due to growing pains; but these days, it's all business.
One of my favorites cropped up when America Online released its infamous 5.0 browser that ended up not-so-coincidentally hijacking users' computers and crippling other installed service providers and browsers. The move was so egregious that it sparked a class action lawsuit just weeks following the Time Warner merger announcement. AOL spokesman Rich D'Amato opined, "The lawsuit has no basis in fact or law."
Look - I've seen it first hand - and it's a fact. I suppose AOL considered it a good way to grab market share by the fistful. But many of its 20 million users are ramping onto the information superhighway for the first time and can hardly be expected to navigate the inherent pitfalls that come with installing or uninstalling a booby-trapped browser with training wheels.
The unresolved issue over America Online's monopolistic market share in the instant messaging space and its subsequent interoperability standard foot-dragging deserves far more attention than regulators are giving it. The Beltway Boys would be aptly described as an assembly of technophobes, so their collective apathy doesn't exactly come as a shocker. But mark my words, with instant messaging well on its way to enjoying an almost e-mail-like ubiquity, a resolution demands to be carved in stone.
And who can forget Time Warner's goon tactics as recently as May of this year? The company yanked ABC's signal from more than 3.5 million U.S. homes for a day and a half after the two sides couldn't come to an agreement over retransmission rights. Sure, ABC's parent Disney deserves exactly half the blame for demanding the equivalent of highway robbery; but for Pete's sake, Time Warner's gross display of arrogance amidst a pending review of its blockbuster merger should have given trustbusters a sneak preview at what's to come.
This marriage of content and pipes has two bullies walking arm-and-arm down the aisle. Both companies have shown little evidence that their anticompetitive activities won't continue unabated following the merger. This latest open access move with Juno is nothing more than thinly veiled lip service. Now, the best consumers can hope for is that government regulators' skepticism and scrutiny over the proposed merger isn't more of the same.
Any questions or comments, love letters or hate mail? As always, feel free to forward them to kblack@internet.com.
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