Sorry to burst your bubble, but:
<< AOL has just spent alot of buck to upgrade their hardware so accomadating new users should be no problem. >>
You're seriously incorrect here. AOL just Announced that they PLAN to spend $340 million (of money they don't have) over the next FOUR YEARS to add 280,000 leased modems to their existing pool of about 170,000. If you use fairly conservative numbers, and assume only half of the 7 million current subscribers choose the $19.95 plan, based on industry rule-of-thumb of 10 unlimited accounts per modem, that would require AOL to have about 450,000 modems NOW.
<< 2) Honestly I don't know how great the upgrade effected them financialy. >>
This is true, because they haven't spent it yet. Unlike TV, AOL can't just increase its "ratings" by buying better programming - they also have to build the infrastructure. The only way to avoid that expense (About $1200 per modem on the BBNPlanet deal, or $120 per new customer) is to push the modem activity and bandwidth off onto the Internet Providers like AT&T. However, by doing so, the revenue per customer drops to half ($9.95/month) for the "Bring your own TCP/IP" plan. Since AOL's cost per new subscriber has reached around $300, what is the payback period at $9.95 per month?
Concerned yet?
Art |
