news.com
AOL speeds broadband
plans
By Jim Hu
Staff Writer, CNET News.com
September 29, 1998, 3:15 p.m. PT
America Online has taken another step in
developing future broadband initiatives by tapping
Mario Vecchi, a cofounder of Time Warner's cable
Net access provider, Road Runner.
Vecchi will serve as
AOL's vice president of
broadband development
and report to Miles
Gilburne, senior vice
president of corporate
development. At Road
Runner, he was a senior
vice president and chief
technology officer, and
oversaw technical
operations and
engineering.
AOL has made it clear
that it plans to prepare
its service for high-speed
access once the
bandwidth opens up and becomes more affordable
for home users. The company is currently
undergoing trials for digital subscriber line (DSL)
service in a number of cities across the United
States, and plans to offer the high-speed service for
$49.95 per month.
DSL uses common copper phone wires to transmit
information at speeds more than 25 times faster
than is possible with 56-kbps dial-up modems.
Access via cable is an alternative, and cable access
providers such as Road Runner and @Home are
competing for the consumer market by offering
Internet access at comparable or greater speeds
than DSL.
AOL also has indicated it wants to be a major
player in the cable access market. But AOL
spokeswoman Kathy McKiernan declined to
elaborate on how it plans to do so.
"We are confident that we will be able to provide
broadband access to our customers," McKiernan
said. "We'll be partnering with both 'narrow band'
and broadband [providers], and will be making
available the best technology."
"[AOL] knows that this is slowly but surely
becoming a broadband world, and they need to be
there when it happens," said Mark Mooradian, an
analyst at Jupiter Communications.
But AOL's foray into the cable access market so
far has been impeded by regulatory roadblocks as
well as the cable industry's reluctance to share its
networks with outside Internet access providers.
Indeed, cable access companies such as @Home
are positioning themselves not only to provide
high-speed access to consumers, but also to build
out their content offerings in a challenge to popular
Web navigation and search services such as Yahoo
and online services such as AOL.
This puts access providers like AOL in a quandary.
While the online giant has committed itself to having
a broadband presence, it is unclear whether AOL
would want to play second fiddle to cable access
firms. Being unable to provide access could make
AOL search for other ways to compete in the cable
access space. However, analysts point out, AOL
may be forced to bite the bullet and subject itself to
cable access providers' control.
"TCI has a controlling stake in @Home, so
@Home wants to be the portal for their broadband
service," said Mooradian. "They do not feel obliged
to give AOL carriage. They would want AOL to
pay them dearly for that."
Though Vecchi's appointment may give AOL more
of a technological boost in developing its
broadband architecture, his presence may also be a
necessary step to improving AOL's relationship
with cable access providers.
Some analysts say that AOL's best strategy at this
point is to leverage its marketing strength--the
Dulles, Virginia, company boasts 13 million
subscribers--and try to partner with cable access
providers. "[Vecchi] can certainly help the cause,
but they've got a lot of ground to make up," said
Michael Harris, president of Kinetic Strategies.
"They need business relationships," he added.
"They need to do deals with the @Homes and
Road Runners of the world."
However, providers such as @Home may be
hedging their bets before shaking hands with the
online giant. In light of AT&T's $48 billion deal to
acquire TCI, @Home, which is partially owned by
TCI, has content and navigation plans of its own.
"If you view @Home as a portal, do you want
these subscribers to go into AOL at all, or do you
want them to stay in your playground?" said Harris.
"They've got a pretty impressive content offering
right now.
"The ball is in AOL's court to get the cable
operators interested to do deals," he added. "They
can continue to whine to the FCC to open up the
systems, but that's disingenuous."
Mooradian echoed Harris's concerns, but
suggested that the appointment of Vecchi could be
the necessary push AOL needs to strike positive
long-term relationships with the providers: "The
point is, Road Runner could be AOL's angle into
the broadband world. [But] AOL would want to
cooperate with both of them rather than one of
them." |
