Charter Communications' high-speed cable Internet access service, Charter Pipeline, will offer MSN content and services to its users. Beginning in Oct. 2001, Pipeline customers will see a co-branded home page with links to MSN Search and selected content from MSN properties such as MSNBC and MoneyCentral. By early 2002, Pipeline customers will be able to use a co-branded version of MSN Explorer, a specialized Web-browsing client with built-in links to numerous MSN services such as Hotmail, MSN Messenger, eShop, and MSN Music. Controlled by Microsoft co-founder Paul Allen, Charter Communications is the fourth largest U.S. cable TV provider with about 7 million subscribers, but it lags in Internet access service, ranking 19th with about 400,000 subscribers. The financial terms of the agreement were not disclosed.

Less Risky Broadband Strategy

The move is a new and less risky attempt to capitalize on what Microsoft feels is the immense—but delayed—potential of broadband Internet access. In the past, Microsoft invested tens of millions of dollars in broadband companies such as NorthPoint, Rhythms NetConnections, and Qwest, then offered these companies' Internet access services under the MSN brand name, with links to MSN services included as part of the deal. But broadband companies, particularly independent DSL providers, have experienced difficult times recently—both NorthPoint and Rhythms filed for bankruptcy protection in 2001.

Microsoft has also invested in cable companies—US$5 billion into market leader AT&T and US$1 billion into third-place Comcast. These investments have focused on selling the Microsoft TV platform for enhanced TV services, with the secondary goal of linking these enhanced TV services with MSN. But the market for enhanced TV is developing more slowly than expected, and AT&T has been considering alternative enhanced TV platforms from Microsoft TV competitor Liberate, despite Microsoft's huge investment. Meanwhile, both AT&T and Comcast curently use Excite©Home, which is allied with an MSN competitor (Excite), to offer content and caching services to their cable Internet access customers. (Excite©Home declared bankruptcy in late Sept. 2001, and AT&T will purchase the ailing company's assets and continue to use it; Comcast plans to end its relationship with Excite©Home in summer 2002).

By providing MSN content and services to smaller broadband providers who are anxious to make their services more appealing, such as Charter, Microsoft gains a larger audience for future fee-based services that require lots of bandwidth, such as streaming media, without the risky investments that have characterized its past forays into the market.

Resources

For background on Microsoft's investment in NorthPoint, see "NorthPoint Demise Won't Impact Broadband Strategy" on page 23 of the May 2001 Update.

For the latest on the company's enhanced TV initiatives, see "Microsoft TV Facing Uncertain Market" on page 15 of the July 2001 Update.

For background on MSN Explorer, see "Latest MSN Launch Integrates Brand, Targets AOL" on page 22 of the Dec. 2000 Update.