great news just out.....AOL in high-speed expansion with Ameritech
America Online set to report after close
By Bambi Francisco, CBS MarketWatch
Last Update: 6:46 PM ET Jul 21, 1999
Net Stocks
Internet Daily
DULLES, Va. (CBS.MW) -- Just one day after ExciteAtHome Chief
Executive Tom Jermoluk said the regional bells would be the "ultimate
competitor" if they partner with portals, America Online is jumping into
bed with yet another Baby Bell, Ameritech.
The Dulles, Va. company said it's partnering with
Midwestern phone company Ameritech (AIT:
news, msgs), connecting AOL with three regional
bells that span 55 percent of the nation's
households. The deal was announced on the day
America Online reported solid quarterly results.
See earnings story.
Recently, ExciteAtHome's (ATHM: news, msgs)
Jermoluk told executives at a southern California
Net conference that his main competitors weren't
just portals but telecommunications companies. See
related story
The nuts-and-bolts of the agreement include a
multi-year structure whereby the Chicago-based
regional bell will speed up deployment of digital
subscriber line technology which allows traditional
copper phone wires to transmit voice, data and
video at speeds up to 13-times faster than
standard 56K modems. The DSL upgrade is
expected to cost AOL members about $20 extra per month on top of the
standard subscription rate of $21.95.
AOL's just announced link-up with Ameritech has led analyst to believe it
will eventually strike agreements with other Baby Bells it doesn't have
relationships with, including BellSouth (BLS: news, msgs) and U S West
(USW: news, msgs), which agreed to be acquired by Qwest
Communications (QWST: news, msgs).
AOL currently has deals with Bell Atlantic (BEL: news, msgs) and SBC
Communications (SBC: news, msgs), which is acquiring Ameritech. These
alliances position AOL to deliver Net access through DSL. The services
are slated to be rolled out as early as late summer.
This strategy of partnering with regional phone companies challenges that
of ExciteAtHome's plans to be the high-speed gateway to the Net via
cable lines.
Among chat rooms,
Silicon Valley, and
Wall Street, the
question always
surfaces: so, when will
ExciteAtHome and
AOL strike a deal?
ExciteAtHome's
Jermoluk has said he's
"completely open" to working with other portals, including AOL, as long
as those portals are willing to share in the incremental revenue to cover the
infrastructure costs.
Free access has also been a topic of contention. Jermoluk and Exodus
(EXDS: news, msgs) Chief Executive Ellen Hancock have both said that
one day broadband access could drop down to zero, in other words, free
because services, such as content, will generate the revenue.
Meanwhile, as AOL pushes ahead to build out a national footprint to offer
its customers high-speed access it appears to be losing the battle to get
open-access.
"The fight in Washington has been won by cable for now," said Scott
Cleland, policy analyst at Legg Mason Precursor Group.
On Tuesday, the Federal Communications Commission filed an "amicus
brief" that supports its long-standing decision to not have local
governments regulate open access.
But the decision raised the ire of proponents who want localities to have
jurisdiction to open up access lines. On Wednesday, the OpenNet
Coalition, a group of more than 200 independent Internet service
providers, issued a statement saying: "We are astonished ... this is not
about jurisdiction, it is about abdication of responsibility."
The uproar comes as no surprise to Cleland. "This is not good for any ISP
or e-commerce player that is not affiliated with a cable company," said
Cleland. "Broadband access is about access to the most lucrative
customers because who has the money to access these services."
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