Allen Goes Into Broadband

Billionaire Paul Allen was on the move Monday as the Microsoft founder invested $1.65 billion in RCN Corp. and looped it into a broadband alliance with Charter Communications, Go2Net, and High Speed Access.

It marks one of the largest investments to date by Allen's Vulcan Ventures, which has been taking stakes in a myriad of IPOs [Initial Public Offerings] and other firms.

Dubbed "Broadband Partners," the move cobbles together Allen properties to extend his reach into the growing market for high-speed Internet access as a way to provide voice, data and TV service.

It's a trail being blazed by other players such as AT&T.

RCN, which offers local phone service, long distance, cable and Internet service over its own fiber optic network, will work with Charter Communications, Go2Net, and High Speed Access to develop broadband products.

RCN also inked a deal with Charter Communications, which has filed for an IPO, to provide telephone service in Los Angeles.

Allen already owns 4.9 percent in RCN. The latest investment will give him a 21.8 percent stake, the Wall Street Journal reported.

"As the Wired World continues to unfold, we look forward to finding opportunities between these companies and our other new media investments," William Savoy, president of Vulcan Ventures, said in a statement.

Allen's $1.65 billion investment in RCN is in the form of mandatorily convertible preferred stock, which will be converted into RCN Common stock no later then seven years after it is issued. The preferred stock is convertible into RCN Common stock at a price of $62 per share.

Broadband Partners will establish headquarters on the West Coast later this year. Management for the company has not yet been identified.

"Cable companies are uniquely positioned to deliver the next generation of advanced data and transactional services," Vulcan's Savoy said. "By linking four of our key investment companies, and combining their expertise in various aspects of cable and new media, we are aiming to create a comprehensive broadband portal for the delivery of those new products and services."

By Steve Gelsi