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Wednesday, June 23, 1999 Published at 06:59 GMT 07:59 UK

Business: The Company File

AOL fights to stay on top

Investing to keep its place as the largest Internet provider

By BBC News Online's Kevin Anderson in Washington

Internet giant America Online has taken two major steps in as many days to realise its "AOL Anywhere" initiative.

On Monday, AOL announced a $1.5bn investment in Hughes Electronics, a satellite subsidiary of General Motor. The next day, the online company announced a deal with handheld maker 3Com to allow its subscribers to send and receive e-mail using 3Com's popular Palm computers.

AOL and 3Com will also explore marketing co-branded versions of Palm's latest handheld, which allows limited wireless access to the Internet.

In May, 3Com introduced the Palm VII to users in New York, Connecticut and New Jersey. The company expects to make the product available nationally in the US later in the year.

The new Palm allows users to gather information from the Internet, conduct e-commerce transactions and send and receive instant messages.

AOL and 3Com will explore providing content using the web-clipping service on the Palm VII. Palm's web-clipping services provide stripped-down web content to the devices.

The two companies will also investigate whether they can expand their co-operative efforts using the recently announced port of Sun Microsystems's Java II technology to the Palm platform.

Broadband breakthrough

The deal came a day after AOL announced that it would invest half of its cash on hand in Hughes Electronics, which offers satellite television and high-speed Internet access.

Industry analysts have said that AOL must find ways to deliver its services over broadband networks or risk losing its position as the nation's largest Internet service provider.

Broadband options in the US currently include cable modems, satellite service and digital subscriber line (DSL) service.

AOL has struck deals with regional telecommunications companies such as Bell Atlantic on the East Coast to provide high-speed access using DSL service.

AOL has been seeking a cable company partner to challenge AT&T's position, which was strengthened by its recent acquisitions of cable companies TCI and MediaOne. But its search continues.

The online service has also been lobbying Congress and the Federal Communications Commission to compel cable companies to open access to their lines for a fee.

A recent court ruling in Oregon raised the possibility of more open access to cable connections, but the FCC opposes such regulation.

Not just computers

The investment in the electronics company builds on the partnership that AOL, with its 17 million subscribers, and Hughes, with its own 7 million, announced last month.

The two companies will jointly develop a set-top receiver, which is expected to reach consumers by early next year.

The interactive AOL TV is key in the companies "AOL Anywhere" strategy to provide its service on devices other than computers.

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