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To: art slott who wrote (5467)	7/10/1999 1:04:00 PM
From: Skip Jack	Respond to of 13157

Date Posted: 7/9/1999 Excite@Home targets AOL Offers to pay for AOL content in homes that switch to high-speed cable access Facing aggressive goals for adding high-speed Internet subscribers, AT&T is pulling out the stops with a promotion targeting America Online customers. The offer: Sign up for the high-speed TCI@Home service, and AT&T for a limited time will pay the monthly $9.95 "bring your own access" fee AOL charges for its content. Cox Communications is running a similar promotion for Cox@Home. TCI@Home and Cox@Home are the market faces of AT&T-controlled parent Excite@Home. The promotions, a nod to the popularity of AOL, offer features such as e-mail "buddy lists," instant messaging, and chat rooms, and avoid pushing AOL users into an either-or corner by stressing the advantages of broadband vs. dial-up access to AOL and the Internet. "AT&T and Cox are selling @Home's speed advantage," says Janco Partners analyst Ted Henderson. The promotions, which come as the battle for high-speed data customers is intensifying, clearly will boost customer acquisition costs for the two operators. They'll also have to achieve a delicate balance between demand and supply or many potential customers may be alienated by lengthy wait-times for installation, analysts say. Conversely, if AT&T-controlled Excite@Home doesn't capture big market share now, when competition is still relatively scarce, it could well lose out to telephone, wireless or satellite companies. "AOL has already achieved critical mass in the narrowband space," says John Corcoran, analyst with Stephens Inc. "They've already won. [Excite@Home] is keenly aware they need to be the first player in broadband to achieve that critical mass. Why? It's an open question as to how a consumer connects. Will you call the cable operator or will you call the regional Bell company? You have to be the player that gets that phone call." Cox, which launched its promotion in June, offers to pay the AOL fee for three months. AT&T's cable arm, AT&T Broadband & Internet Services, launched its promotion July 1 and is offering to pay the fee through December. The AT&T offer also includes free installation--typically a $150 charge--and one free month of service. Despite the animosity between the cable industry and AOL, the two recently launched promotions aren't blatantly pushing AOL subscribers to switch. But the underlying message--why drive a Yugo when you can have a Ferrari--is clear throughout the promotional material. Cox's www.coxrevolution.com Web site, for instance, offers detailed instructions on how to convert from AOL to Cox@Home, complete with an 800 number to call to cancel AOL. Barely a week into the promotion, "the phones have started to ring," says Ann Ivancie, director of Internet marketing operations for AT&T BIS. AT&T is taking a shotgun approach with a 30-second spot on TCI cable systems, a 60-second radio spot, print ads running in local papers, two waves of direct mail and an online banner ad. The promotions, characterized in some quarters as bounty programs, come as AT&T is in the midst of a nasty fight with AOL and others over open access. AOL, US West, MindSpring and other members of the OpenNet consortium want regulators to require cable operators to open part of their networks to competing Internet service providers (ISPs). AT&T and the cable industry in general counter they're exempt from such a requirement under the 1996 Telecom Act and that such a requirement would chill investment in broadband networks. "We were a little frustrated that AOL arguments in Washington make it sound like you can't use AOL and a cable modem," says Joe Rooney, vice president of marketing for Cox's Orange County, Calif., operations. "We thought, why not market exactly toward that? That's a way to show we can offer a win-win just as well if not better than the phone companies." Amid the friction, however, AT&T and AOL are staying in touch. AT&T BIS President-CEO Leo Hindery and AOL President-COO Robert Pittman have an amicable relationship and talked as recently as last week, one source says. Both executives are said to be interested in a business solution to the access issue, while AOL Chairman Steve Case favors legislation.