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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: ISOMAN who wrote (22974)	6/18/1999 6:48:00 AM
From: Craig A	Respond to of 41369

AOL's European Strategy Emerges (NYSE: AOL) June 18, 1999 by Kevin Prigel streetadvisor.com The strategy for America Online to dominate the European continent as it has dominated the US has begun to emerge. Much has been made of recent inroads made by so-called "Free ISPs" in England (a story we first reported in January). These "Free ISPs" take advantage of the fact that local calls in Europe are charged much as long distance calls in the United States are. That means that to connect to the net users must pay a toll charge. By using a service, similar to 1-900 service in the United States, the "Free ISPs" offer net access with only the per minute charge. Even though the charge per minute is slightly more than what users would pay to access the current AOL service, the users do not have to pay any monthly subscription fee. This model has appealed to thousands of users in England, pushing AOL out of the #1 ISP spot. America Online has shown no interest in competing with "Free ISPs." Instead the net provider dropped its monthly subscription fee from around $27 to $16.50. Meanwhile, the company has given no indication about how it will win the battle in England. Through various sources, we have now pieced together a map of how America Online will win on a continent where "Free" is dominating. First, America Online will launch all-inclusive flat rate pricing for European customers. Instead of dealing with per minute charges, AOL users will pay one monthly fee for unlimited access to the service. This will make AOL an appealing alternative to the "Free ISPs," whose pricing structure limits prolonged usage. This all-inclusive pricing gives America Online a huge advantage for marketing and merchandising. Compared to other net service providers in Europe, AOL's unlimited users would likely spend much more time online, similar to their American counterparts. That will allow AOL to build out its European model much like the domestic picture, with access fees covering network costs and marketing and merchandising providing the profits. Secondly, America Online will continue to lobby European governments to remove the toll charges that local calls must bear. Initial inroads have been made in Germany, where the courts ruled that telecom monopoly Deutsche Telecom can not subsidize Internet services with the toll charges, and can not offer combined Internet and local calling service. As European governments realize that toll charges are limiting the growth of the net in Europe, and limiting their economic growth, we expect this antiquated monopolistic fee to be discharged.