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Technology Stocks : America On-Line: will it survive ...?
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To: Kai Tao who wrote (1071)1/15/1997 11:44:00 PM
From: jack rand   of 13594
 
>The company claims its .45 cents per hour.
>Has anyone done research to confirm or debunk this?

Because much AOL traffic now goes over AOLnet it is very
difficult now even for AOL to translate cost into `per hour'.

Reason: It's a function of how much modems/ports, lines (bandwidth), and router capacity you devote per user. For example, right now with the overload, the ratio of the fixed costs of modems and lines
to subs using them is less than previously, and less than AOL will
have to achieve to reduce overload.

Frankly I don't understand Pittman's statement of `incremental cost'
of $0.25/hr. What does `incremental' mean??

And, oft forgotten is that the huge costs of customer service are included in the costs used to compute gross margins. Clearly, AOL is having to spend heavily adding support personnel.
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