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Technology Stocks : AOL, now I get it
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To: jack rand who wrote (384)1/26/1997 7:08:00 PM
From: yard_man   of 496
 
You're probably right there, jack. They'd figure out which areas were hardest hit and make it across the board for those folks. Other poeple could moan. Tough luck.

I was reading something the other day in a trade magazine I get. (I'm an electrical engineer.) In IEEE Spectrum magazine they had their yearly issue on technology predicitons -- one of the insets included in the article on the internet had a discussion of some work by some engineers who were trying to charcterize mathematically the nature of internet traffic -- apparently it's nothing at all like typical phone traffic. It has some very fractal-like characteristics. Predictions made based upon old methods used to predict telecom traffic fall down -- internet traffic is significantly more "bursty." This implies significantly more capital investment required for the same number of users as opposed to a regular telecom environment.

I'm personally not surprised that AOL underestimated what it would take to upgrade and the usage that would be demanded when they went to flat rate pricing. They really should have taken some time to do their homework and simply limited sign-ups to what they could handle, telling others they would have to wait. This would have been unpopular, too -- but not the disaster they are now encountering.
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