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Technology Stocks : AUTOHOME, Inc
ATHM 23.10-1.5%Dec 3 3:59 PM EST

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To: E. Davies who wrote (10006)5/31/1999 11:34:00 PM
From: Frank A. Coluccio  Read Replies (2) of 29970
 
Hello Eric,

>Dont forget also that AOL requires you start at aol.com <

Yes, if you subscribe to their service, then that's there prerogative, for what it's worth. But I don't think that that is significant in this discussion. At least I fail to see how it is material. Then again, I've never focused on the matter, so please explain why this is a burden or undesirable.

I'm inferring from your posts, and many others here (not surprisingly) that it is your collective opinion[s] that AOL or others should not have access to their own channels over cable. A channel, after all, is a commodity on the open market, despite it being a privately owned, albeit, franchised, piece of property, is it not?

Here, the franchised part should not be underestimated, I believe, for an argument can be made at the municipal level, as has already occurred, for openness. After all, franchises are awarded in accordance with the provider's agreement to meet and satisfy public necessities and conveniences. And these terms could leave open a gaping hole for endless debate, once the model starts to take off. The last word hasn't been written on this subject, yet, I firmly believe, despite Kennard's unusual stance on the matter.

If a channel is up for bid to broadcasters and program/content providers, why shouldn't ISPs have a crack at it too?

CNN, MSNBC, ABC, etc. bid, lobby, or otherwise negotiate for their own channel rights in an open market situation. And don't they always get them, hands down? Are any of them as large as AOL from a market cap standpoint? Why can't Mindspring or AOL participate in kind?

What if AOL buys out CBS? The only thing they would need to contend with, then, is the upstream allocation that would either have to be shared with ATHM, or provisioned separately after some retrofitting, which can be satisfied as well (see below). What do you suppose would happen if AOL was allowed to enter into a bidding war against the Cooking Channel for, say, Channel 1 or Channel 50 on the STB?

And, of course, an AOL, just as ATHM does, would be dependent on CableLabs, in order to get engineering modifications put into the premises application breakouts, or in the STBs, as well as in the head ends. These would, for the most part, be software definable at the user's residence, and require some modifications in the head end.

Even the upstream obstacle can be circumvented with dedicated allocations, if all parties negotiated in good faith. I suppose a crucial issue here is whether or not channels on cable systems are subject to open market factors, terms and conditions, much less UCC guidelines, or are they more or less the sole purview of some closed community of patrons?

Folks may think that these considerations surrounding cablemodem services, as opposed to program services, are altogether different, but at the root level where the RF meets the photon, they are not. I don't think so, at least. Except that the cable industry holds ownership of the rule book on how bandwidth gets divided up.

These are arbitrary rules, at best, and they are not about to be changed by the powers that be, without external motivation, to make it easier for multiple cable modem entrants at this time. Not without the cable principals putting up a strong fight. And as far as I'm concerned, their arguments derive more from chutzpah than science. And all onlookers are absolutely dumbfounded and bamboozled over it, for this is the only model they know and trust to be viable.

That will continue to hold true, of course, unless they (the MSOs) have a similar need to establish a precedent first with secondary and tertiary channels of their own, soon, which I think will be the case soon, due to predictable congestion levels at some point in time. Or, because they want to open up a separate class of service for telecommuters, or municipal educational systems, or whatever.

Until now, it's been the proposition that it wasn't feasible to do this, and even I have been on that side of the argument at times. But if push ever came to shove, and if it were in the cable industry's best interests, you can bet that they would find a way to create more cablemodem spectrum, albeit, at the sacrifice of some other parcel of the upper spectrum that was previously earmarked for their own digital TV or interactive services for the future.

I'm not necessarily saying that even a second cablemodem channel for the MSO's ISP's interests (namely ATHM's) will be sufficient, given the total bandwidth constraints that currently exist on the overall HFC design, and what I see to be very large demands on bandwidth in the future. What I'm saying, however, is that it will be feasible to create the additional channel for delivery of cable modem services, regardless of who the tenant is, or no matter how tight that bandwidth may become, over time.

And to be fair, many of the conditions I've just alluded to with regards to congestion and limitations of the current model, might actually disappear for a long time, if T actually follows through with their resegmenting of outside plant loops (down to 50 to 75 homes per segment) as we've been reading about lately. Those are some ambitious plans I've been reading about, and frankly I don't think they'll come to pass for at least another 3 to 5 years. But they are certainly steps in the right direction, and they put to rest, once and for all, the erroneous notion that today's HFC can do it all.

Putting this back into the context of DSL and AOL, I think that there will be many parallels, back and forth, between these two platforms, if AOL should decide to make DSL a primary, or permanent, solution.

While ATHM currently only has AOL to contend with, along with a few other large players with clout, the AOLs of the world would have somewhere in the vicinity of 5,000 smaller ISPs who may want to ride their wires in a similar way, if AOL garners the discounts they think they will, and the smaller ones don't.

Well, I guess I've gone on long enough here. Comments welcome, as usual. <Shields Up!>

Regards, Frank Coluccio
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