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Road Runner's biggest enemy these days is not Wile E. Coyote. It is the modern mega-merger.
Facing a one-two punch from the AT&T Corp.'s acquisition of MediaOne Group Inc. and the proposed melding of America Online Inc. and Time Warner Inc., the cable modem service's future is about as certain as the fuse on an Acme time bomb. It is possible the service will disappear completely within the proposed AOL-Time Warner-the largest of several major stakeholders-but it also could find life as a network service organ or as a separate cable access reseller, according to experts.
The first challenge Road Runner faces is from AT&T's MediaOne buyout, which the FCC approved in May. The question is whether, now that the companies are in the process of integrating, AT&T Broadband will transfer over its 325,000 MediaOne Road Runner customers to its own Excite@Home service.
AT&T Broadband still is evaluating which way to go in that regard, according to spokeswoman Sarah Duisik. Until a decision is made, new Internet customers in MediaOne territory will sign up for AT&T Road Runner-branded service, she says.
"I think there are many issue hanging on one another, including the name of the high-speed data service," she says. "It's more of a branding issue than anything-what customers are used to seeing."
It wouldn't be the first time high-speed Internet users from other services have been moved over to Excite@Home, according to Richard Holden, senior director of product management. Canadian MSOs Shaw Communications Inc. and Rogers both transitioned from the Wave broadband Internet service to Excite@Home.
"The only difference here would be the scale would be a lot greater than we have done before," Holden says.
Customers could be notified of the change either through a mailed package with an information CD or an online site. On the back end, Excite@Home can set up accounts and re-register the customer IP addresses.
"The goal is certainly not to move the customer over and leave them hanging-there's a lot of thought that goes into it," he adds. "A lot of the difficult part is to do the planning up front, so you have this customer communication-so you are not flooding your call center with calls from confused customers."
Another issue is what to do with Road Runner equipment now sitting in MediaOne headends. Holden says it is likely Excite@Home would install its own modem control equipment and then slowly decommission Road Runner gear while bringing its own on line.
Analysts, meanwhile, don't see an immediate transfer in store for MediaOne Road Runner customers. "It's not a given-it's not as easy as everyone expects from a technical standpoint or the standpoint of whether the feds will like it or the standpoint of the service agreement that set up Road Runner," says Dylan Brooks, an analyst for Jupiter Research.
Keeping dual Excite@Home and Road Runner service also may have short-term advantages in appeasing open access supporters. But Excite@Home does have the higher-capacity backbone, so Brooks thinks that eventually MediaOne customers will become Excite@Home subscribers.
That change may loom, but of greater impact to Road Runner is the merger proposed between Time Warner and AOL. A subject of hot regulatory debate, the merger likely would see most of Road Runner's operations folded into the AOL side of the new company.
If so, don't count on the Road Runner name to endure, according to Michael Harris, president of Kinetic Strategies Inc. "Road Runner is more about transport than it is a brand," Harris says. While existing customers may continue to keep their Road Runner e-mail addresses, new customers will likely be brought in under the AOL flag, and "I assume the Road Runner brand will quickly go away."
If Road Runner does become an organ within AOL's Internet empire, what role will it play? Probably not as a network operator or a content division, Jupiter's Brooks says. He points out that unlike Excite@Home, Road Runner has not built an extensive network to play a role outside of its own local territory.
"They are not going to be selling access to their pipes and their fiber links to the likes of AOL," Brooks says. "The question is do they continue to be a consumer-facing ISP?"
With AOL already the number-one ISP on the planet, that is doubtful. Brooks thinks Road Runner "won't be a major player in AOL-Time Warner's broadband strategy."
"Assuming the merger goes through relatively unscathed, AOL looks to be the prime driver in the company's broadband growth," he adds. "It's a matter on one hand what the new corporation if merged feels what they could do and what makes logical sense-whether to keep it separate or fold it in."
Harris also sees the possibility Road Runner could live as an organ within AOL-at least its cable modem technical support functions. "They could become a broadband network service within AOL," Harris says. "Road Runner is well suited to providing affiliate management structure."
But keeping its content operations is another matter.
"I would have a tough time believing AOL will allow others to make content decisions," Harris points out. "On the flip side, AOL doesn't know much about provisioning and installing cable modems."
Brooks, too, doesn't believe Road Runner's future is as a broadband content portal for affiliates. He points out in the open access future, most of the major ISPs will want to do this themselves.
One possible business model for Road Runner-and Excite@Home-is to assume a wholesaler role between the cable operators and ISPs.
"You could look at Excite@Home and Road Runner becoming ISPs for the ISPs," Harris notes. "They could become cable resellers, basically providing a means into cable systems by offering a turnkey solution."
For now, the biggest problem facing Road Runner is maintaining service amidst the uncertainty-witness the summer exodus of several top executives.
"Waiting to be gobbled up by AOL is not the most dynamic environment," Harris says. "I would think the real challenge for Road Runner now is to maintain its level of service amidst these rocking changes."
If it can do that, Road Runner might keep repeating its recent strong operating performance before the next shoe-or anvil-drops.
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