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Technology Stocks : America On-Line: will it survive ...?
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To: John Howell who wrote (2549)3/24/1997 12:25:00 PM
From: Eric Jorgenson   of 13594
 
Thanks for the comments John.

<<The problem with AOL is that they must grow to stay in business. Growth means that they must expand infrastructure AS GROWTH OCCURS.>>

I agree that AOL is saddled with not only improving capacity for the current subscriber base but expanding to meet any further growth. But don't you agree that the growth in alternate revenue streams such as advertising, on-line commerce and premium services isn't tied so heavily to expansions in infrastructure?

<<The accepted standard for access providers is 8 or 10
users per modem. AOL's current ratio is over 50/1 (if you
believe their subscriber numbers). Their stated goal is to
acheive a 25/1 ratio near term, which they are touting as a level
that will end their problems.>>

I agree that a ratio of 10/1 would be ideal and I hope at some point they approach this. However, since I subscribe to AOL I can give you an idea of their current performance:

AOL is now nearing the 25/1 ratio (perhaps still one month away?) and I've found this capacity to be satisfactory. Half of the time I connect on the first dial. At the busiest hours, I wait at most two minutes to connect. I've downloaded and now use an auto-redialer, so getting connected hasn't been a hassle--if I don't connect on the first dial I occupy myself with other things until I hear AOL's "You're Online" message. Once online, AOL's speed has been completly satisfactory, even relative to my high speed ISDN connection at work.

Regards,
Eric
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