AOL and DoCoMo in alliance talks

America Online and NTT DoCoMo are in talks about an alliance that would propel the US company’s push into wireless Internet access and rekindle its flagging Japanese operations.

A deal, if reached, would also give the Japanese mobile communications company a large stake in AOL’s Japanese operation, though the US company is thought to be drawing the line at handing over outright control of the unit.

Talks between the two sides “have been going hot and cold for some time and are now heating up,” said one person close to the discussions on Wednesday – while adding that a deal was not imminent. Neither company would confirm the talks.

For Michael Lynton, head of AOL’s international operations, a deal with the largest Japanese wireless company would mark a breakthrough in efforts to replicate the dominant US Internet company’s success abroad. AOL has fallen behind Yahoo! in Japan and has had only sporadic success elsewhere.

By linking with DoCoMo, AOL would have a place on more than half of the mobile handsets in Japan, while DoCoMo could be left with a way to extend its popular i-mode wireless data service overseas.

“They are interested in expanding internationally and we are interested in expanding in Japan,” said one person close to AOL.

I-mode, which was launched early last year, has attracted attention worldwide as one of the first services to make a success of selling Internet access and instant messaging over wireless handsets. Reuters