TW, US West a Net team

ANAHEIM — Time Warner Cable and its partner, US West Media Group, announced plans here Wednesday to merge their high-speed online services to create what will be the nation’s largest broadband online business, with the two MSOs looking to bring in fellow operators as affiliates.

The venture joins Time Warner’s Road Runner with US West’s MediaOne Express to facilitate high-speed access to the Internet. The partners’ online services combined are available to more than 3.6 million households. The partners said the joint deal will ultimately be capable of reaching more than 27 million American homes.

The deal makes sense in that US West already owns 27% of Time Warner Entertainment, which carries the majority of Time Warner’s 12.5 million-subscriber cable operation and thus a piece of Road Runner as well. Time Warner will carry a 66% stake in the combined venture, but the two companies will have an equal say in running the service.

Both Time Warner and US West have steered clear of opportunities to invest in @Home Corp., a similar service bankrolled by MSOs TCI, Cox and Comcast. New merger will be structured much like @Home, but at a cost more fiscally attractive to the partners.

Focus of the new venture will be on content, applications and services, and on the development and marketing of a branded, high-speed Internet PC and TV service that will be distributed through the networks of the partner companies and affiliates.

There’s also a good chance the merged entity will give Microsoft Corp. — which is a major investor in US West and has been working with the telco on broadband set-top boxes — a broad market over which to distribute its Microsoft Network and in which to use its Internet Explorer Web browser.

The software behemoth has been investing in high-speed Internet access technology for some years now, and it appears that the merged Road Runner-MediaOne entity will be the likely reward for its patience.

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