t2K - actually, I think the argument is pretty simple.
If I understand Bill, he is not arguing the AOL vs Yahoo models, but rather the very concept of any "fixed" porthole.
But even if it is an argument between AOL vs Yahoo models, argument would boil down to "content".
Actually, you bring in an additional twist, that it's the hardware provider vs AOL, or AT&T vs AOL. Unless the government legislates that AT$T has to be neutral, from a purely theoretical point of view, AT$T has an advantage.
Imagine that content is equally desirable across all the models: direct providers, such as AT&T, MediaOne and cable in general, versus piggybacking ISPs such as AOL, versus no-hardware portholes such as Yahoo.
Well, if the content is EXUALLY desirable, and absent government regulation, why wouldn't the direct providers be in the best position? They would provide the service - and hook you on to their starting point. Since the content in this scenario is no more desirable on AOL or Yahoo, why switch? Ergo - by sheer inertia, they win.
Of course, the thing is, you can't guarantee content to be equally desirable. But here is the key - there is no reason to say a priori that AOL or Yahoo content has to be the best! What if one day AT&T is best?
Seems to me, that's like arguing - in TV terms - that ABC will always dominate, or CBS, or NBC. If content is what decides - then one can only say, whoever has the best content wins - for the moment.
The point however is more subtle - after all, it's not simply content providers. They are not all equal. AT&T (and other hardware providers) does have the initial hardware advantage - so it's AOL's and even more Yahoo's job to win the customer away with better content (and no guarantee that they will have better content). Initial inertia is a powerful advantage of incumbency. It's the incumbent's to lose. Obviously that doesn't mean that AOL or Yahoo are doomed, but the playing field is NOT level.
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