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To: Michael Young who wrote (11924)	6/30/1999 9:34:00 AM
From: Frank A. Coluccio	Read Replies (1) \| Respond to of 29970

Michael, you raise an interesting point. "I also look for the Bells to offer free ISP. They make their money from people ordering second phone lines." The ILECs in many areas have adopted technologies to avert the kinds of bottlenecking that once resulted in clogging up their switches in their central offices. Now the ILECs can easily reroute IP traffic around their hubs, and directly to the 'net from the access line (sorta). The second line you spoke of may allow them to garner additional dial up [and voice splitter-provisioned dsl] service charges more profitably. This may indeed be an incentive for them to offer cut rate or even free I-access, as you suggest. And when the lines are not used for 'net access, they are available for normal phone use, as well. Just some additional thoughts on the matter. Regards, Frank Coluccio

To: Michael Young who wrote (11924)	6/30/1999 10:30:00 AM
From: Lane Hall-Witt	Read Replies (1) \| Respond to of 29970

Maybe, but I think the economics of free access will be brutal. With competition coming from the cable pipe into the house, a second phone line may become even more of a commodity than Net access. I don't see the Bells having any pricing power for multiple lines into the home. More importantly, DSL doesn't even require a second line; and I would think high speed will be a necessary offering for any company that hopes to play the ISP game on a mass scale. I'm not sure I see a business model for long-distance providers to offer free ISP. We again run into the problem of the commodification of their core business: pricing power for long-distance carriers is severely limited . . . and we haven't even seen mass penetration of cheaper-still IP long distance. I just don't know what exactly they gain by leveraging free access services, unless they can generate the big advertising and e-commerce dollars that some analysts say could sustain free access. It's a very interesting business scenario to think about.