'Two tier' Internet threat from AOL deal



Cliff Saran, Mike Simons and Caroline Davis

UK and European businesses may soon be able to offer their products and services on massive...



Cliff Saran, Mike Simons and Caroline Davis

UK and European businesses may soon be able to offer their products and services on massive Internet sites, through the consolidation of European Internet portals, analysts predicted this week.

The news follows the announcement earlier this week of a planned £100bn merger between America Online (AOL) and Time Warner, which would create the world's largest media company and Internet content provider.

Forrester Research believes the AOL/Time Warner deal is the first of several big Internet mergers. Other possible mergers could include Yahoo and Disney.

End-users could benefit from such massive mergers, believes Andrew Parker, an analyst at Forrester Research. "Over time, Internet content will become more sophisticated," he said.

But there is a risk that the combined clout of AOL and Time Warner would provide a closed Internet with content from Time Warner unavailable to other ISPs.

Henning Dransfeld, new media consultant at analyst Ovum, said the Internet could become "two tiered" - one free, the other subscription-based. "Free ISPs will have to develop AOL-style quality services and reliable access to survive," he said.

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