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Technology Stocks : AUTOHOME, Inc

ATHM 23.96

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3:59 PM EST

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To: E. Davies who wrote (14459)	8/14/1999 11:30:00 AM
From: gpowell	Read Replies (1) of 29970

Here is the critical question. Will it really? How many more users? It depends on how loyal people are to their ISP's I guess. Assume that since cable ready PC's are ready for deployment in Q1 00' that this implies the local nodes and ATHM's backbone are prepared for faster subscriber growth without jeopardizing QoS. Evidence has suggested the subscriber growth rate is directly limited by the number of qualified installers. If true then this can be remedied by an infusion of cash to hire and train installers - these need not be entirely temporary workers since the node sizes will probably need to be adjusted as local demand increases. An infusion of cash comes from the current ISP's that wish to migrate a portion of their customer base to the cable distribution system. The cable ready pcs will not create exponential subscriber growth rates (something we investors have hoped for) until new lines are strung to individual houses and splitters/filters are installed. This still takes an installer. You do not partition it off to each ISP. You lease all of the last mile or none of it Could you clarify this comment? Lease all of the last mile? What do the other ISPs get then? I'm confused... Under the proposed open access model the structure of the distribution is as follows: 1.)The MSO's retain control over the last mile - the local nodes. 2.)The network owner (ATHM for example) provides the headend and backbone (or leases it from someone else). 3.)The ISP uses the infrastructure provided by 1 and 2 to attract and retain customers. In this scenario the ISP only provides enough infrastructure to package a product and connect it for delivery to it's customers via the infrastructure provided by the MSO's and ATHM, thus ISP is really a misnomer. The advantage is any number of ISP's can coexist by using the same infrastructure. This is open access. The relationship between ATHM and the MSO's must be severed. Then the privileged access to the local nodes (last mile) must be leased to any qualified bidder that provides network infrastructure. The qualified bidders requirement is an important distinction since the MSO's have a vested interest in seeing that customers have excellent QoS. At this time ATHM would be the only qualified bidder - I believe. This scenario creates open competition at every level - assuming other last mile systems exist (DSL and wireless for example). ATHM would also be able to provide network services to these other distribution systems. I still favor ATHM retaining it's ISP duties but their own ISP service would have to compete on a level playing field.

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