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Technology Stocks : America On-Line: will it survive ...?
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To: Zoltan! who wrote (1286)1/29/1997 7:58:00 PM
From: Art Stone   of 13594
 
That's a very interesting and informative article. I think some of the figures are on the low side, and the omission of the startup and semi-fixed costs is a fairly major shortcoming.

My main frame of reference is Netcom. They're about as a pure as you're going to get for looking at an ISP. They have a large subscriber base, they don't dabble in any other side businesses, and they have a reasonable quality product. At $19.95 per month, they've been losing about $10/month per customer.

I think that with the possible exception of some of the phone companies, there is no real opportunity for profit in the home nationwide ISP business because of all the additional costs in running a redundant network, and the added expense of 800 number customer support.

The local and regional ISPs are the ones likely to turn the corner and make money - especially once the user base starts to stabilize and they get up to T-3 kinds of scaling benefits.

Back about a month ago in the alt.aol-sucks newsgroup, I made the observation that if I was running an ISP, I would raise my new subscriber rates in January, so when the folks who quit to "rejoin" AOL returned back to the ISPs, they would be more receptive to the value provided by a real ISP, and be willing to pay for it. That was several days before Netcom announced the end of $19.95 unlimited accounts.
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