now that i've given the game plan away, please reciprocate with
the info about who AOL's major modem vendor is...
You and I both know who it is: USRX
A solid indicator of the effect of AOL on USRX was shown when USRX (another one on which I'm somewhat bearish) went up substantially upon AOL's announcement they were buying another 150k modems (now I'm hearing 200k).
If the company survives they'll probably be alright once they get these modems rolled out. An additional 200k is not enough to meet the demands of 8 million users (I think they need 275k to 550k more than the current 258k), but I think they'll be dealing with fewer than 6 million users when it's all said and done. If that happens, they'll still be a little bit outside of acceptable ratios, but not too far.
If anyone wonders about these figures, here goes.
It's common knowledge among ISPs (and the reason I think AOL is still in more legal trouble) that a 10:1 user/modem ratio is optimal, with 15:1 being the upper limit. At 15:1, you'll have some frustrated users, but they won't bail out in droves. At 10:1 everyone's happy.
AOL currently has 258,000 modems.
Assuming 10:1 ratio, 800,000 modems (542,000 more than present) are needed to serve 8 million users; 533,000 (275,000 more than present) would be needed for a 15:1 ratio.
If users drop to 6,000,000 (I think it's very likely to go lower than that, though), 600,000 modems (342,000 more than present) are needed for a 10:1 ratio; 400,000 modems (only 142,000 more than present) are needed for a 15:1 ratio.
Current ramp-up plans only cover 4.58 million users at the 10:1 ratio they *should* be at.
Keep in mind that these figures are a bit on the generous side (for AOL) in that they assume that AOL's proprietary content prompts no more usage than the web in general, which is not AOL's assertion. On the outside, they may need an 8:1 ratio to adequately meet their users' needs.
Keep in mind they're at about 31:1 right now and they knew it going into this game. They knew that from 1/2 to 2/3 of their users would not be able to get in.
I'll leave it to someone else to figure out the financial aspects of the above if they like. |
