Solid,
The Myth of the Fight for the First Page
Ironically, I have to take advantage of a rumor I saw somewhere (can't even remember the source) on the net to facilitate my babbling below. The rumor was AOL and T/ATHM talk broke up because T/ATHM wanted $10 per user from AOL while AOL only willing to pay $3. We have to know that the talk started even before T bought TCOMA, and I believe its right after the ATHM IPO time if not earlier. So, I am quite sure the talk has been going on and off for two years.
Now, if you're buying a piece of real estate property or buying a new car from a dealer, imaging that huge gap of 7 ($10 - $3) for considerable length of time on the bargaining table - The seller would just walk away from you and shouting you're not being serious, wouldn't they? Is AOL's $3 for the first page too much to ask? No, I think it's reasonable, and I would accept the deal in no time. So, what's wrong with T/ATHM?
Well, imo, the first page in broadband doesn't mean as much as that in the dialup. You have to know...
1. ATHM service is always on.
2. Intel's chipset (810? verified please) already support suspend to memory mode (current OS only support to hard disk mode), Microsoft OS will support it soon. With 5W (verified the number again please) power consumption in idle mode, I doubt that anybody will turn off their computer anymore. Even now, do you think TJ or Steve Case powering off their PC after they leave office for the day?
So, you turn on your computer, load 4 browser sessions with 4 identical first pages. Immediately, you switch one to Excite voice chat, one to SI, one to E-Trade, and one for general-purpose www hopping. As long as you don't turn off the computer, these four pages will be with you forever, $3 for first page is a steal for ATHM. For Armstrong, T/ATHM is open free for www.yahoo.com, open free for www.lycos.com, open free for www.whatever.com... and most importantly open free for
aol.com
(I encourage you just click into it and browse around.)
Now, the funny thing is www.aol.com is NOT the typical AOL, the cash cow, we've been referring. AOL best wish is anything but WWW. Therefore, I am very confident to narrow the focus of the AOL and T/ATHM talk to the only issue of - the price tag of Bring Your Own Pipe, that is, installing AOL V4 (V5 coming) modified for broadband protocol to ride on @home ISP, the so called dumb pipe. No more IE5 browser or Netscape browser that you and I are using (In fact, they have to consider the issue of AOL@home users intend to use IE5 or Netscape. Should the IP be immediately be disabled? Big issue!) In this case, from now on, should we stop using the First Page, and start using the Dominated Page or simply the Only Page instead? Wow! Now that definitely can NOT be a $3 deal.
Our immediate common sense thought will be why AOL can't modify its strategy to adopt the paid service model such as SI or thestreet.com? In this case, T/ATHM don't even have to charge them a dime to ride on the dumb pipe. I will tell you why AOL can't do that?
1. Money on the ISP which is greater than 60% of AOL revenue will be totally wiped out as far as cable and DSL modem concern.
2. The flowers.com, greetingcards.com, doctors.com, auctions.com, stocktrades.com, shoppings.com... all the e-commerce contracts signed with AOL so far have to have AOL as a locked environment as the most critical provision. IF AOL changed its service to a "paid yahoo", then the e-commerce contracts have either to be renegotiated with lower price or to be legally cancelled, and the best we can hope for is AOL not to be sued by these companies.
The bottom line is that on the surface of the phenomenal success of AOL business model, actually, AOL is pushing itself further away from the WWW, the room for a change is getting smaller and smaller each day with more and more e-commerce companies buy into this AOL fairy tale.
With what I've gone through so far, if it's still on the right track, I can almost picture why and how AOL got itself into the openNET which, imo, is full of absurdity because...
1. openNET can't successfully isolate cable, it only target so far, from other telecommunication infrastructure plays such as fiber optics, satellite, and wireless for openness. Members of the openNET themselves have current and future investments in the telecommunication infrastructure can't even afford for openness.
2. Attacking AT&T cable acquisition is a weak case. First, T has not been proven for cable monopoly yet, and heavy debt on cable assets raise constant concern among analysts. If there is no worry ATHM openness before T, then why worry ATHM after T? Stop T buying UMG? will that solve open access problem?
Strictly IMHO, AOL was not the originator for openNET. The organization started by RBOCs. openNET is an inevitable by-product of the 1996 Telecommunication Act. AOL joined later with RBOCs to give name to this organization with only one common intersection - to delay cable broadband deployment.
RBOCs want to delay cable because DSL is more expensive to achieve the same quality as cable (achievable though). They need more time to milk dialup ISP. If RBOCs have the broadband desire in the first place, most of us will be using ISDN today.
AOL wants to delay broadband because...
1. Majority of AOL users has no compelling need to move to the broadband, at least for the near future.
2. AOL business model faces severe problem to come to the WWW side. Reasons have been stated above.
If AOL really serious about the immediate move to cable broadband, we won't be stuck in the big gap between $3 and $10 for efforts of the past two years. Is AOL's move to openNET a smart one? For now, the answer is definitely YES. Looks like AOL is the representative voice of the openNET. It went even further to hire a previous FCC guy to be in charge of the whole show of open access.
However, try to read the following abstracted story and see how you feel. Before you read, keep in mind those DSL (and the current dialup) contracts that AOL signed with RBOCs. Here you go...
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AOL received a backyard BBQ invitation from telcos for some routine meeting as usual.
Upon arrival, AOL saw people sitting together too close for comfort, but who cares.
There was a shackle with big chain on the ground and looks like a nice piece of toy. Telco guys urge AOL to play with it.
Click! The shackle locked up on AOL's ankle. "Wow, this is well made toy, look at the hinge, it feels like a heavy duty piece... Ok, now give me the key to unlock this thing."
"Key? What key? Don't have one... Some pigeon flew away with it! Look at our ankles... We all got locked up and chained together... Guess what? You happen to be the very first one on this chain... You need to lead us to places."
"I am leading? Which place?"
"I will let you know, but I don't like to talk... Just keep moving straight ahead, when I kick your left butt, you turn left, when I kick your right butt, you turn right... Be swift but gentle... I warn you... Don't ever let any one of us fall down!"
"What if one of you fell down?"
"I thought you were smart... Simple logic... It will be a kick right between the legs!"
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For me, AOL's moves are so predictable, including the reaction to Microsoft's Instance Messaging assaults. If you and I were Steve Case, we would have to do exactly the same things as he did, no other choice.
Enough said, for now, I see T/ATHM has no need to continue the talk with AOL for it wouldn't be serious anyway. To make AOL happy, doesn't mean RBOCs will stop its open access propaganda. Just focus the effort in the courtroom such as Portland and Boward. The only risk in my mind of holding ATHM is T's Hindery. T needs to investigate this guy as soon as possible. Something must be very wrong with him.
Everything... JMHO. |
