January 10, 2000
Web posted at: 2:03 PM EST (1903 GMT)

By D. Ian Hopper
CNN Interactive Technology Editor

(CNN) -- The merger of media powerhouses America Online-Time Warner may speed along access to the broadband bells and whistles that some lucky customers already enjoy.

AOL, through partnership deals, has access to Digital Subscriber Line and satellite connections but has been denied cable distribution. ISP Excite@Home has an exclusive agreement with AT&T -- though that's soon to change -- and AOL and other ISPs have been jealous of the fat pipes that bring speedy, always-on Internet access and multimedia to pockets of customers across the country.

With Time Warner Cable's 20 million subscribers, the largest in the United States, AOL can finally combine its popular exclusive content and newbie-friendly access with a heavy-duty infrastructure. The companies have already announced that well-known AOL brands such as Instant Messenger, Digital City, AOL Search and AOL MovieFone will soon appear on Time Warner's Road Runner broadband Internet service.

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This also gives a shot in the arm to AOL Plus, the already-announced broadband version of America Online, to be launched this spring. CNN news clips will also appear on CNN Plus.

Time Warner is the parent company of CNN and CNN.com.

Time Warner CEO Gerald Levin was especially bullish about the music angle.

"One of the most exciting things about this transaction related to the music business," Levin said. "Through AOL and through the Internet, you have a worldwide opportunity to promote. The music business is built on signing new acts, and this new society has a vast field of which to choose. Also, music lends itself to the digital downloading and more efficient delivery of music."

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Already, the companies have announced that AOL members will have access to a "wide range" of music clips from artists signed with Warner.

"One of the early things that we've seen is that this catapults the Warner Music Group. We're working on a structure that maximizes that," Levin said.

The deal coordinates nicely with AOL's announcement of the upcoming AOLTV products at last week's Computer Electronics Show. The AOLTV set-top boxes will come in three flavors: Internet access through phone, access through satellite in conjunction with DirecTV, and a Tivo-based device that allows Internet access as well as a digital VCR for recording and manipulating live TV broadcasts.

All of the devices use Liberate Technologies software in the set-top box, as well as in the network infrastructure. AOLTV will start with the most basic applications: e-mail, instant messaging, Web access and a program guide.

"Those four 'killer applications' leverage a really significant value that AOL brings to the table," says David Limp, vice president of Corporate Development at Liberate. "The concept being that if you are sitting in your living room in front of your TV, you should be able to chat with your buddies with the same AOL buddy list on your PC. You should be able to read the mail and use the same address book. Your account should remain intact."

Time Warner's involvement could bring both promotion and functionality to AOLTV. With integrated e-commerce, and that Holy Grail of broadband TV, video on demand, AOL hopes to roll out a service that eclipses the myriad of services that have only a couple of those features -- among them Microsoft's WebTV, ReplayTV, and pay-per-view.

Liberate already has a service it calls the Advanced Television Enhancement Forum that allows for one-touch e-commerce from a TV remote. The combined properties of Time Warner and AOL could speed the rollout of these new technologies.

"Say you're watching CNN, and a commercial comes on," Limp says. "Let's say the commercial is a cross-branding with a Time Warner property, the Warner Music Group. Now a bug could appear that lets you immediately purchase that from CDNow."

The Liberate software supports video on demand, too, but that reality has been constrained by a need for partners and a lack of bandwidth. But Time Warner cable and the company's media holdings could alleviate that quickly, Limp suggested.

While it's bound to take time before these services become a reality, technology isn't as much a hurdle as is the businesses' organizational structure.

"Warner Cable is in the last year of the digital conversion of their cable plan," he says. "Once the infrastructure is in place, they can roll out digital set-top boxes. The box that Time-Warner uses most, a Scientific Atlanta box, is the one we use with our software. We can put our software on that."